Key Takeaways
- The loan would primarily be used to pay off its existing debtor-in-possession (DIP) financing loan
- In December, B. Riley Financial Inc offered $72 million to avoid the bitcoin miner’s bankruptcy.
Bankrupt Bitcoin Miner Core Scientific has received court approval to borrow $70 million from investment bank B. Riley, one of the miners’ biggest creditors. The loan from B. Riley will ensure the miner has “sufficient liquidity to operate their businesses and administer their estates in the ordinary course for the duration of these Chapter 11 cases.”
The Bitcoin Miner stated that the loan would primarily be used to pay off its existing debtor-in-possession-DIP financing loan, which also came from B. Riley. If approved, the loan will enable the company to pay off its existing DIP facility and give it “up to 15 months runway and significant flexibility,” the miner stated.
“The Replacement DIP Facility lays the foundation on which the debtors will seek to negotiate a consensual Chapter 11 plan with all of their key constituents and maximize value for all stakeholders.”
When Core Scientific was facing liquidity issues, B. Riley Financial Inc offered $72 million to avoid the bitcoin miner’s bankruptcy. The $72 Million loan offer included $40 million with zero contingencies and $32 million with conditions — to retain value for stakeholders. In December 2022, Core Scientific filed for Chapter 11 bankruptcy protection, stating it has $1 billion to $10 billion in assets, liabilities, and creditors between 1,000 and 5,000.
On December 23, Core Scientific received interim approval to access a $37.5 million loan from existing creditors to fund it amid liquidity issues. As per court filings, the loan comes from a group of creditors who hold over 50% of Core Scientific’s convertible notes, which agreed to provide debtor-in-possession (DIP) facility commitment loans up to a total of $75 million.
Core Scientific is one of several miners struggling to keep afloat as rising energy prices and low Bitcoin fees have forced miners toward the brink of bankruptcy. The firm had first hinted in late November that it was most likely heading toward a bankruptcy without a fresh injection of cash.
In its third-quarter financial report, Core Scientific reported having $1.4 billion worth of assets and $1.33 billion worth of liabilities as of September 30, showing a tight balance sheet amid the bull market.
