Crypto Infrastructure • February 16, 2023, 6:48PM EST

Compute North's plan for liquidation of remaining assets approved by court

Quick Take

Hosting provider Compute North’s plan to liquidate all remaining assets was approved by a judge on Thursday.
The company has already eliminated about $250 million in secured debt through asset sales, with about $130 million to $150 million of unsecured debt remaining.
All operating sites have been sold, but there is still equipment left.

Bankrupt hosting provider Compute North's liquidation plan was approved by a judge with the U.S. Bankruptcy Court for the Southern District of Texas.

While the company has already sold a majority of its assets in the past few months, some are still leftover and proceeds will now be going mostly toward unsecured creditors.

"We had overwhelming support from our general unsecured creditors, well in excess of 90% in the amount of unsecured claims" and reached an agreement with those who filed objections, James Grogan, an attorney with law firm Paul Hastings, told The Block.

The company filed for Chapter 11 bankruptcy in September of last year and had about $400 million in debt, Grogan said. Since then, it has eliminated about $250 million in secured debt through the sale of assets, including all of its operating sites.

For instance, it sold its 50% share in a 280-megawatt wind power facility in Texas to US Bitcoin Corp, which recently announced a merger with miner Hut 8. Other buyers included Foundry, Crusoe Energy Systems and Generate Capital.

What's left?

So what's left the former hosting company to be sold? Mainly equipment purchased for project build-out, including a "substantial amount" of ASIC machines, a few containers and electrical equipment, Grogan said.

About $80 million worth of unsecured debt has been compromised through settlements and, at this point, there is about $130 million to $150 million of unsecured debt left, he added.

One of Compute North's largest clients, Marathon, had also invested $10 million in convertible preferred stock of the company and $21.3 million in an unsecured senior promissory note, in addition to having $50 million in operating deposits. The company agreed to a settlement, stipulating it would "be allowed as a single general unsecured claim of Marathon Digital Holdings, Inc. against debtor Compute North LLC in the amount of $40,000,000.00."

Core Scientific, the largest company in the mining space by hashrate, also filed for bankruptcy in December but has essentially gone the opposite route, securing additional financing to keep operations going.

However, it did recently agree to hand over 27,403 machines to lender NYDIG in order to pay down its outstanding debt of $38.6 million, while also stating it was "considering opportunities to sell certain of their mining facilities," according to a filling from Feb. 2.