The Chapter 11 bankruptcy filing of Core Scientific, a Bitcoin BTC $30,253 mining firm facing insolvency, lays out a detailed plan for full and final satisfaction of allowed debtor-in-possession claims.

Core Scientific, a Bitcoin miner currently navigating bankruptcy, recently presented its Chapter 11 reorganization strategy. The Southern District of Texas Houston Division’s United States Bankruptcy Court received the document, which was drafted in collaboration with key stakeholders. The filing indicates Core Scientific’s intention to create broad consensus about the company’s shape and structure post-bankruptcy.

In the period since the Chapter 11 filing, the company has experienced an upswing in liquidity, attributing this to the rise in Bitcoin prices, a surge in network hash rate, and decreased energy costs. Core Scientific is now setting its sights on revamping its business plan to ensure a successful resurgence.

A Chapter 11 bankruptcy process allows a struggling firm to stay operational until all stakeholders reach a consensus on a restructuring plan. This could involve steps such as reducing business operations to lower debts or selling assets to repay creditors. The formal document detailing how the company plans to reorganize and repay its creditors is the Chapter 11 bankruptcy plan.

According to the bankruptcy plan, holders of approved debtor-in-possession (DIP) claims will receive complete and final compensation on the effective date of the plan. The resolution will be in the form of either a full cash payment or a mutually agreed alternative treatment. Additionally, any liens securing the DIP claims will be extinguished, effectively eliminating the secured interest over the company’s assets.

Core Scientific had been granted court approval to secure a loan of up to $70 million from investment bank B. Riley, one of the company’s major creditors. This loan would serve to settle Core Scientific’s existing debtor-in-possession financing loan, also provided by B. Riley.

On December 21, 2022, Core Scientific initiated its bankruptcy filing due to dwindling revenue in the wake of depressed BTC prices. This decision came just after a creditor proposed to assist Core Scientific in evading potential bankruptcy.