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B. Riley’s $70M Financing Deal to Be Approved by Bankruptcy Judge for Core Scientific

Bitcoin mining company Core Scientific (CORZ) has received a lifeline in its Chapter 11 bankruptcy process as a federal judge has signaled approval of a $70 million loan from B. Riley Commercial Capital. The financing deal is expected to aid the struggling company’s efforts to recover and regain its financial footing.

Core Scientific’s Bankruptcy and $70M Financing Deal

During the same hearing, Judge David Jones of the Southern District of Texas provided additional support to the struggling Core Scientific by agreeing to a $70 million loan from B. Riley Commercial Capital. This financing deal is expected to help the company get back on its feet as it navigates through the Chapter 11 bankruptcy process.

Furthermore, the judge responded positively to the request of a group of stockholders to form an official committee that would represent their interests in the case. However, he emphasized that the formation of the committee is dependent on the availability of a budget for the group.

Following months of struggling to cope with the sustained crypto market downturn coupled with high energy costs, Core Scientific filed for bankruptcy in December. According to a filing on February 27, prior to the bankruptcy filing, the company had a debt of $552.5 million in outstanding principal under senior secured convertible notes, $41.8 million owed to B. Riley, and $242.5 million under various equipment financing agreements.

Core Scientific’s DIP loan agreement with B. Riley could be finalized as early as today, pending a final order. Meanwhile, a hearing scheduled for Friday will address the formation of the stockholders’ committee and determine the budget for the DIP financing. Once a budget is agreed upon, the financing will be used to support the company’s reorganization and pay for various expenses associated with the bankruptcy process.

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B. Riley Commercial Capital, a subsidiary of B. Riley Financial (RILY), is the provider of the DIP loan to Core Scientific. The financing deal was not without controversy, as equipment lender BlockFi had initially voiced concerns that it did not offer adequate protections for its collateral. However, the issue was resolved prior to the Wednesday hearing.

In a filing made on December 21, Core Scientific’s Senior Vice President of Capital Markets & Acquisitions, Michael Bros, disclosed that equipment loans such as those from BlockFi are undersecured, with up to $90 million in collateral. This information sheds light on the significant amount of financial pressure that the company was under prior to filing for bankruptcy.

Equity Holders Request Official Committee and Budget Approved

A group of equity holders submitted a request to the court on February 3, seeking the establishment of an official committee that would offer input as regards valuation and negotiating the bankruptcy terms. According to the group, Core Scientific is solvent, and the recent surge in bitcoin prices and the recovery of energy markets have resulted in an increase in the value available for equity. This assertion implies that there may be an opportunity for equity holders to recover their investments in the company, subject to the success of the reorganization efforts.


On February 3, a group of equity holders requested the establishment of an official committee to provide input regarding valuation and negotiation of the chapter 11 plan on behalf of equity. The group claimed that Core Scientific is solvent, given recent market movements, and that the value available for equity is increasing. In response, Core Scientific agreed with the group’s assertion that it is not hopelessly insolvent, and supported the motion to create the committee. 

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The proposed budget for the committee is $4.75 million, which includes fees for financial advisors and other costs, to be taken from secured assets. However, the judge expressed some reservations about the committee’s potential impact, noting that he would “reserve the benefit” of “hindsight.” He warned that if the committee’s actions did not serve the interests of equity holders or were harmful to other creditors, he might take action to reduce the committee’s budget.

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