A group of Core Scientific Inc. convertible bondholders is working with restructuring lawyers at Paul Hastings as the company weighs a potential bankruptcy, according to people with knowledge of the situation.
(Bloomberg) — A group of Core Scientific Inc. convertible bondholders is working with restructuring lawyers at Paul Hastings as the company weighs a potential bankruptcy, according to people with knowledge of the situation.
Investors were rattled after Core Scientific, one of the world’s largest miners of Bitcoin, warned last week that it may run out of cash by the end of the year and could seek relief by filing for bankruptcy. The company’s stock slumped to a low of roughly 20 cents following the disclosure.
Representatives for Core Scientific and Paul Hastings didn’t respond to requests for comment. Reorg earlier reported on the hire.
Core Scientific has been weighed down by a prolonged drop in the price of Bitcoin, rising electricity costs, increased competition and litigation with bankrupt crypto lender Celsius Networks LLC. The digital-asset space has already seen a slew of bankruptcies this year, including crypto mining services firm Compute North Holdings and crypto broker Voyager Digital Ltd.
Given its cash crunch, Core Scientific said it won’t make payments coming due in late October and early November tied to some of its debts. Those creditors could accelerate payment, sue the company for nonpayment or take other actions, which could then lead to a default under a pair of convertible notes due 2025.
As of Oct. 26, the company held 24 Bitcoins and roughly $26.6 million in cash. Its debt load at the end of June was more than $850 million.
Core Scientific is working with PJT Partners and Weil Gotshal & Manges to explore options, including raising additional capital or restructuring its debt.
(Update with sector distress in fourth paragraph.)
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