Bitcoin mining firm Rhodium has filed for Chapter 11 bankruptcy in Texas. The company’s liabilities hover in the $50 million to $100 million bracket, while its total assets are estimated to be worth around $100 million to $500 million.
Six affiliate subsidiaries — Rhodium Encore, Jordan HPC, Rhodium JV, Rhodium 2.0, Rhodium 10MW, and Rhodium 30MW — were mentioned in the official bankruptcy filing.
Earlier this month, it was reported that the firm was in financial distress and allegedly failed to repay loans that were due in July. Rhodium raised $78 million through debt financing in March 2021 to roll out two liquid-cooled mining projects.
Emails from investors to Rhodium’s management over the past year reportedly indicated that the company’s executives had already signaled in August last year that they would not be able to repay the combined loan payable of $54 million.
Two debt restructuring proposals were made before the deadline. However, differences of opinion among stakeholders instigated the default.
Under Chapter 11 voluntary bankruptcy, the company will be able to reorganize its debts while continuing operations. Furthermore, it will be able to negotiate its repayment plan under revised conditions.
Law entity Quinn Emanuel Urquhart & Sullivan will presume the role of the general bankruptcy counsel, while Province will act as the restructuring adviser.
In a similar case, bankrupt exchange FTX’s lawsuit, set into motion by the US Commodity Futures Trading Commission [CFTC], officially wrapped up last month after almost a year and a half. The exchange agreed to a $12.7 billion settlement with the regulator after several rounds of negotiation spanning across months.
The proposed settlement was an integral component of the debtors’ proposed Chapter 11 reorganization plan.
FTX emphasized that the CFTC is "the most significant single creditor" in Chapter 11 bankruptcy cases, and given the conduct, guilty pleas, and convictions of the FTX Insiders, the debtors faced substantial liability to the CFTC.
