A federal judge approved the final reorganization plan for effectively defunct crypto mining services firm Compute North, which was one of the largest in North America, setting the firm on track to become a shadow of what it once was.
Compute North filed for bankruptcy protection in September because it was unable to meet its debt obligations. The mining firm has closed 13 asset sales, four of them major, which have “satisfied” all of its secured debt, which was $250 million, said Compute North’s attorney at a Thursday hearing.
“Nobody was going to like what I was getting ready to do,” Judge Marvin Isgur of the Southern District of Texas said when Compute North’s attorney revealed a last-minute “Hail Mary” that will allow the mining hosting firm to move forward with its restructuring plan.
Compute North has settled its debts with numerous companies in order to get them on board with the plan and avoid future litigation. Those include industry giant Marathon Digital Holdings, which agreed on Feb. 9 to a general unsecured claim to $40 million in return for accepting the plan. Another 11 firms had to settle with Compute North for relatively minor claims for the plan to go through.
Three of the agreements – two from customers and one from a supplier – came at the last minute.
The last three holdouts were Decimal Digital, which had ordered machines and hosting services from Compute North, which will get its machines back but pay the packing and transport fees. Decimal will also serve in the committee that will oversee the enforcement of the plan, along with investment firm Touzi Capital.
Corpus Christi Energy Park, which was building the infrastructure for a mining site in Texas, also agreed at the last minute to retain an up to $5 million unsecured claim.
BitNile, a relative newcomer to the industry under a parent group with a wide portfolio, has claimed $20 million, $18 million of that in damages. The miner has also sued Compute North for fraud, arguing that the hosting firm never tried to plug in its machines as per their deal signed in August, just before the bankruptcy. BitNile was allowed a $1 million unsecured claim for voting purposes.
The plan approves the final list and classification of creditors’ claims, and sets up a litigation trust to go forward looking for funds from ongoing cases. This will in turn determine how Compute North’s remaining assets will be divided among the remaining claimants.
One of its major lenders, Generate Capital, earlier took over two of the bankrupt company’s mining sites in Texas, which U.S. Bitcoin Corp. will manage. Foundry, which was owed $10 million from an equipment loan, bought two other minor sites. Foundry is owned by CoinDesk’s parent, Digital Currency Group.
According to the plan, remaining unsecured creditors will retain ownership of remaining assets, such as transformers and containers, and disburse them among the claimants. A litigation trust will be set up to close from ongoing legal procedures.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.