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Core Scientific has received permission from the bankruptcy court for the Southern District of Texas to take out a loan of up to $70 million from investment bank B. Riley, one of the company\u2019s biggest creditors. The loan would be used to pay off the bankrupt Bitcoin miner\u2019s existing debtor-in-possession (DIP) financing loan, which also came from B. Riley.<\/p>\n
Core Scientific stated its intention of replacing its original DIP loan in advance at the beginning of its Chapter 11 bankruptcy process, saying it would find better terms with more flexibility. The company is seeking to use $35 million to replace the original loan, with the remaining funds to be available in one or more additional borrowings.<\/p>\n
The replacement loan \u201cis the result of extensive marketing and hard-fought negotiations with numerous potential lenders,\u201d Core Scientific stated<\/a> in its motion. The creditors\u2019 committee and an ad hoc shareholders\u2019 committee have approved the move. The loan will ensure Core Scientific has \u201csufficient liquidity to operate their businesses and administer their estates in the ordinary course for the duration of these Chapter 11 cases.\u201d <\/p>\n #Bitcoin<\/a> miner Core Scientific (#CORZ<\/a>) has agreed to borrow $70 million from investment bank B. Riley to replace existing hardware and keep the company running while it goes through Chapter 11 bankruptcy. pic.twitter.com\/JPRnUIXRAo<\/a><\/p>\n \u2014 MoonDefi (@moondefi1) January 31, 2023<\/a><\/p><\/blockquote>\n B. Riley had offered Core Scientific $72 million<\/a> in financing in mid-December in an effort to keep the company solvent. The bank ascribed Core Scientific\u2019s financial woes to \u201can aggressive, ill-conceived strategy\u201d in its offer letter.<\/p>\n Core Scientific filed for bankruptcy<\/a> on Dec. 21.<\/p>\n Related: Core Scientific files motion to sell over $6M in Bitmain coupons<\/a><\/em><\/strong><\/p>\n The company received the court\u2019s permission<\/a> to take out a $37.5 million DIP loan from its creditors at 10% annual interest on Dec. 23, with an additional $37.5 million to be made available in January. A creditors\u2019 representative told Reuters at the time that stakeholders \u201chave faith\u201d in the company.<\/p>\n Core Scientific\u2019s financial problems became known<\/a> in October. In addition to high electricity and low Bitcoin (BTC<\/a>) prices, the company’s financial well-being took a blow when Celsius defaulted on its bills<\/a> after declaring bankruptcy.<\/p>\n <\/p>\n<\/div>\n\n