Nuclear bankruptcy judge approves transfer of more than $20 million worth of equipment to its exclusive energy retailer
The judge in Core Scientific’s (CORZ) bankruptcy case approved a settlement with the bitcoin miner’s exclusive energy contract dealer in which Core Scientific will transfer more than $20 million in electrical equipment to the supplier.
The dispute involves two facilities in West Texas that would cumulatively bring 1 gigawatt (GW) of power capacity to Core Scientific’s portfolio of assets. Beginning in the summer of 2021, Priority Power Management was hired as the miner’s “exclusive energy manager and consultant,” with responsibilities including negotiating power contracts and developing the two west Texas sites, according to an affidavit filed in court by Michael Bros, the miner’s senior vice president of capital markets and acquisitions .
From May 2022, after “it became clear that [two west Texas] The facilities would not receive the expected power load,” Core Scientific stopped making various payments to Priority Power Management, said Bros. Neither firm immediately responded to CoinDesk’s request for comment on why the power was not delivered.
The miner also stopped debt payments in October 2022 when money was low. In December, it filed for Chapter 11 bankruptcy protection.
Because of the work it had done for Core Scientific up until the bankruptcy filing, Priority Power Management claimed it owed about $30 million in the proceedings.
Technically, the agreement will see Priority Power Management “obtain an allowable secured claim of $20.8 million, which will be deemed paid in full upon the transfer of all debtors’ interests in the equipment,” said federal judge David Jones of Southern. District of Texas during a Monday hearing. Secured claims are prioritized over other types of claims in a bankruptcy.
The equipment in question actually cost about $23 million, and about $17 million of that is already in Priority Power Management’s possession.
Under the agreement, the consulting firm will shed its exclusivity in obtaining power contracts for Core Scientific, but retain the $514,000 it earned from power throttling for the miner. Core Scientific will also reimburse $85,000 in legal fees and expenses to the consulting firm.
The two facilities appear to be up for sale, and Core Scientific “will introduce” Priority Power Management to any purchaser so they can negotiate a similar deal, according to the Bros statement.
A spokesperson for the miner said on Monday that “the priority power management settlement does not affect that [sale] process.”
Core Scientific had previously said it would sell two facilities currently under development with up to 1 GW of power capacity as part of its bankruptcy proceedings.
