Core Scientific committee supports motion for mediation with Celsius

By Sarah Lizee

Olympia, Wash., May 19 – Core Scientific, Inc.’s motion for mediation with Celsius Mining, LLC (Celsius Network LLC) regarding their claims against each other gained support from Core’s official committee of unsecured creditors, according to documents filed Thursday with the U.S. Bankruptcy Court for the Southern District of Texas.

“The debtors and Celsius are ideal candidates for mediation,” the committee said in its statement.

“What started as an agreement by the debtors to host Celsius’ miners has turned into a sprawling litigation in which each party asserts multiple claims against the other alleging hundreds of millions of damages in the aggregate.”

The group said that while the facts underlying the parties’ disputes are relatively straightforward, the procedural posture is unusually complex.

Both companies filed for Chapter 11 protection in different jurisdictions, which raises questions as to which bankruptcy court is best positioned to resolve the disputes between the parties, the committee said.

Also, there are now multiple parties in interest beyond the respective debtors in both cases – i.e., multiple committees, lenders and other parties in interest – which would dramatically increase the cost of resolving the disputes through litigation, the group added.

“As the debtors move toward negotiating a plan of reorganization and bringing their Chapter 11 cases to conclusion, finality about Celsius’ claims has become increasingly important,” the committee said.

“The allowance or disallowance of Celsius' asserted $300 million in unsecured claims has potentially massive implications on distributions to unsecured creditors and whether there is ultimately any value available for equity holders.

“Against this backdrop, mediation is a logical and cost-effective path forward.”

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

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