Core Scientific should “trim” its restructuring timeline by “at least [one] month,” the federal judge overseeing its bankruptcy said during a Monday hearing as creditors called for the insolvent crypto miner to fast-track its plans to emerge from Chapter 11 bankruptcy.
Core Scientific’s counsel said the miner could reach a reorganization plan by Sept. 25. That target date accounts for a 90-day exclusivity extension the company recently received to formulate a plan to pay down its debt. U.S. Bankruptcy Judge David R. Jones, of the Southern District of Texas, said the company could still “expedite” the process to appease its creditors.
“To the extent that people are wanting... [a] faster, sooner have-it-done-yesterday type of approach, you can certainly expedite the process,” he said.
The firm’s creditors have quibbled for months over Core Scientific’s bankruptcy proceedings. The proceedings, which began in December 2022, were slated to last just six months but appear poised to drag on for the better part of a year – a fact that has ruffled some feathers among the firm’s long list of creditors.
Thomas Bean, who represents creditor MassMutual, objected to Core Scientific’s request for an extension, arguing it would “incentivize [Core Scientific] to slow walk the case.”
“The debtor has been using our collateral for the last several months,” Bean said. “[It] has not paid the equipment lenders a dime.”
Core Scientific’s counsel, however, argued it required more time to sketch out a business plan to adapt to the shifting realities of a volatile crypto mining landscape that has seen bitcoin prices and hash rates rise as electricity prices fall.
That confluence of factors has made mining more profitable, allowing Core Scientific to generate more revenue to pay down $6 million of its debt, said Ronit Berkovich, an attorney for the debtors.
Given those conditions and the length of its tenure in the crypto industry, Core Scientific has a duty to respond more quickly to the shifting sands of the crypto industry, said Jared Roche, a lawyer for 36th Street Capital and several other creditors.
“The debtor says they need time to address evolving business conditions in the industry, but this is the nature of the crypto industry right now,” Roche said. “It is an immature industry that is always evolving.”
Once the crypto industry’s largest mining company, Core Scientific suffered an astounding, and swift, fall from grace last November, when bitcoin prices cratered amid cryptocurrency exchange FTX’s mid-November implosion. The company went public with a $4.3 billion valuation in 2021, but its market capitalization had fallen to $78 million by the time it filed for bankruptcy last December.
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