Bankrupt mining provider Compute North sells assets to its former lender

Generate Capital is buying two mining facilities for $5 million from bankrupt mining hosting firm Compute North. 

New filings in Compute North's bankruptcy proceedings show a deal has reached the court, with counsel filing a proposed order for the sale of its stake in the Wolf Hollow, Texas, and Kearney, Nebraska, mining facilities. A U.S. Bankruptcy judge in the Southern District of Texas, Houston Division signed the order approving the sale today. Generate will assume the liabilities and obligations associated with the sites and their equipment as part of the sale.

Compute North did not receive any other qualifying bids for the assets in the lead up to the sale, and thus cancelled the planned auction and moved to consummate the agreement with Generate Capital. There is no planned merger or restructuring plan from Generate from the sale. The agreement does not cover assets that are owned by third parties but utilized at the sites.

Generate had a hand in funding of the sites — and allegedly in Compute North's collapse. The lender acted as one of Compute North's biggest funding sources in opening new sites, like the Wolf Hollow mining facility. It agreed to lend Compute North up to $300 million to pay advanced costs and project developments in February of this year.

The deal would sour, with Compute North CFO Harold Coulby claiming during the bankruptcy process that Generate attempted to leverage parts of the agreement that ultimately led to a dissolution of the agreement and the funding that came with it. That left Compute North unable to continue funding in-progress data centers and ultimately to the Chapter 11 restructuring process. 

The sale fulfills the promise of the first day declarations, when Coulby said the plan over the Chapter 11 process was to enter a sale process to market and sell its assets. 

Still, there are other creditors to satisfy. Part of the sale agreement includes so-called "cure amounts" for creditors, and those amounts are still being hammered out in the court process. The committee representing creditors in the case, along with individual creditors, have filed objections related to the amounts laid out in the initial deal. Those are still to be finalized.