Core Scientific gets temporary approval for a $37.4 million bankruptcy loan.
A bankruptcy court in the United States has given Bitcoin BTC
Stock prices fell by $16,823.
Core Scientific, a miner, has been given temporary permission to borrow $37.5 million from existing creditors. This is due to the company’s financial difficulties.
Core Scientific is one of the biggest cryptocurrency mining companies in the U.S., but on December 21, it filed for Chapter 11 bankruptcy because its energy costs were going up, its sales were going down, and the price of BTC was going down in 2022.
Core Scientific said in a public statement on the same day that it planned to “move quickly through the restructuring process” and keep its mining and hosting operations going.
According to court documents, the loan comes from a group of creditors that hold more than 50% of Core Scientific’s convertible notes and agreed to give debtor-in-possession (DIP) facility commitment loans of up to $75 million.
The company’s request was approved on December 22, and court documents show that the DIP loan will have an interest rate of 10% per year.
Core Scientific will be able to get $37.5 million right away to keep the lights on, and a company attorney told Reuters on December 23 that the company plans to apply for the other $37.5 million in January.
In the first DIP budget, Core Scientific was expected to ask for $12.5 million by January 21.
Budget for the Core Scientific DIP: Stretto
The Reuters report also says that the creditors know how hard the bear market is and are looking at Core Scientific as a long-term play.
Kris Hansen, a representative of the creditors, told the news outlet that the people who already have a stake in the company “have faith” in its future, even though it has had some problems recently.
Core Scientific said in its financial report for the third quarter that it had $1.4 billion in assets and $1.33 billion in liabilities as of September 30. This shows that the company has a tight balance sheet during the bull market.
Notably, the company lost $434.8 million in the third quarter. So far this year, the company has lost a total of $1.71 billion. So, the company said at the end of November that it was most likely going to go bankrupt if it didn’t get more money.
The company is said to have mined almost 12,000 BTC this year, which is a big jump from the 5,769 BTC it mined in 2021. However, this has not helped Core Scientific’s financial problems.