Core Scientific’s disclosure statement hearing moved to Sept. 27

By Sarah Lizee

Olympia, Wash., Sept. 13 – Core Scientific, Inc.’s hearing on approval of the disclosure statement for its Chapter 11 plan of reorganization was moved to Sept. 27 from Sept. 15, according to a notice filed Wednesday with the U.S. Bankruptcy Court for the Southern District of Texas.

The company was in mediation over issues related to its plan through August.

An informal noteholder group, the debtor-in-possession lender and the equity committee all agreed that mediation would be an efficient and effective way to resolve the issues.

An amended plan and disclosure statement were filed on Sept. 7.

Amended plan terms

According to the new documents, the company’s proposed restructuring contemplates, among other things:

• 100% recoveries to all classes of creditors other than section 510(b) claims and creditors that have agreed to accept lesser treatment in the form of (i) equity in reorganized parent Core Scientific, Inc., (ii) takeback debt issued or guaranteed by one or more of the reorganized debtors, (iii) a combination of new common interests and takeback debt, or reinstatement of claims;

• Distributions to holders of existing common interests in the form of (i) new common interests, consisting of all residual value remaining after providing recoveries to all other claims, (ii) warrants, and (iii) a right to subscribe for new common interests at a price per share that reflects a 20% discount to the plan equity value, based on an enterprise value of $2 billion;

• Distributions to holders of allowed section 510(b) claims (if any) in the form of (i) new common interests, consisting of all residual value remaining after providing recoveries to all other claims, (ii) new warrants, and (iii) either cash, new common interests, new warrants, or some combination thereof with a substantially similar value to the subscription rights;

• A minimum $55 million rights offering made available to holders of existing common interests, which is expected to be backstopped;

• A roughly $80 million delayed-draw term loan from the DIP lenders, consisting of (i) $25 million of new-money financing, (ii) a rollup of the outstanding balance of the DIP facility, and (iii) a rollup of the B. Riley unsecured claim, which B. Riley has agreed to reduce to $38 million from $44.3 million;

• A committed equity line of credit from the DIP lenders in the amount of $150 million;

• The assumption of most executory contracts and unexpired leases of the debtors;

• A $54 million to $239 million reduction of current debt on the debtors’ balance sheet and a $42 million to $56 million reduction in the debtors’ annual debt service, each depending upon certain creditor elections under the plan.

Core Scientific is an Austin, Tex.-based Bitcoin mining company. The company filed bankruptcy on Dec. 21, 2022 under Chapter 11 case number 22-90341.

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