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Bitcoin miner Core Scientific Inc. accused bankrupt crypto lender Celsius Network LLC of refusing to pay its bills since filing for chapter 11, threatening the data-hosting company’s own financial health, WSJ Pro Bankruptcy reported. The brewing dispute could have a material impact on Core Scientific, one of the largest publicly traded crypto miners, as the massive data centers that host bitcoin mining operations struggle to weather the cryptomarket downturn that dragged Celsius and other crypto firms into bankruptcy. Celsius, which filed for chapter 11 in July, has said in court filings that Core broke its service contract by delaying the deployment of mining rigs delivered to Core and supplying less power to those rigs than required under their contract. Celsius has asked for a court order holding Core in contempt and to compel the hosting services provider to perform. Core in response has asked the court to compel Celsius to pay past-due bills to Core or else allow it to sever its contract with Celsius. "Celsius either needs to adhere to the contract, or Core and Celsius must terminate their relationship before Celsius causes yet another business partner to enter insolvency proceedings,” Core Scientific said in bankruptcy court papers filed on Wednesday. Core and other crypto miners have faced major financial challenges this year as power prices surged, crypto prices crashed and major crypto projects and companies have been wiped out. Core shares have tumbled from over $10 per share at the start of the year to just over $1. In court papers filed on Wednesday, Core said Celsius is attempting to “foist millions of dollars in increased power costs on to Core’s balance sheet.” Core also argued that its contract requires Celsius to cover the higher tariffs currently being charged by utilities.

Crypto service provider Prime Trust agreed yesterday to return $17 million from crypto lending platform Celsius that was allegedly withheld just as digital currencies hit their first bottom last year, CNBC.com reported. Prime Trust, which offers custodial services for digital assets, held $119 million of Celsius’s assets when the two terminated their contract in June 2021, according to the lawsuit Celsius filed against Prime Trust in August. Prime Trust “refused to fulfill its obligation” by transferring the $17 million in crypto assets when the contract was dissolved, Celsius said. Bitcoin seesawed last year, hitting a record in April 2021 of $63,000 before losing almost half of its value by July. It resurged to a fresh record of over $64,000 in November and is now trading at around $19,000. Celsius filed for chapter 11 protection in July. Prime Trust agreed at a hearing at the U.S. Bankruptcy Court for the Southern District of New York yesterday to return the crypto assets to settle the lawsuit. Those assets will be held in a separate account until the court figures out how to distribute Celsius’s assets.

The Justice Department’s bankruptcy watchdog wants Kirkland & Ellis LLP removed as counsel to 3M Co.’s bankrupt earplug manufacturing unit, saying the law firm has a conflict because it also is defending the parent company in mass earplug lawsuits, WSJ Pro Bankruptcy reported. Kirkland & Ellis doesn’t possess “undivided loyalty” to its client, 3M subsidiary Aearo Technologies LLC, according to court papers filed by the Office of the U.S. Trustee on Thursday objecting to the firm’s retention. The U.S. Trustee said that Kirkland can’t be loyal to Aearo because its bankruptcy process is being financed by 3M, which the firm also represents in roughly 230,000 personal-injury lawsuits pending against the company in federal court in Pensacola, Fla. 3M placed Aearo under chapter 11 protection in July in the U.S. Bankruptcy Court in Indianapolis, hoping to move the earplug lawsuits against the subsidiary and its solvent parent out of the tort system. Aearo’s chief restructuring officer said in court papers in August that Kirkland is well qualified and uniquely able to represent Aearo in chapter 11 because of its familiarity with the company’s business and potential legal issues that might arise in bankruptcy. The bankruptcy depends on 3M’s commitment to provide unlimited funding toward resolving the earplug litigation in return for a full release from liability. As counsel to Aearo, Kirkland has a fiduciary duty to maximize 3M’s contribution — and by implication to maximize 3M’s share of their combined tort liability, the U.S. Trustee said yesterday.

An insurer on Monday lost its fight to dismiss the bankruptcy of Imerys Talc America Inc., which sought protection from creditors three years ago, the Wall Street Journal reported. The Manchester, N.H.-based RiverStone insurers said Imerys sold all of its mining operations in early 2021, leaving the company with virtually no business. The insurance company said Imerys has no valid reorganization prospects and that its bankruptcy should be thrown out for bad faith. Imerys filed for bankruptcy in 2019 over more than 14,000 personal-injury claims mostly related to talc it mined that supplied Johnson & Johnson’s baby-powder products, which allegedly cause cancer. Judge Laurie Selber Silverstein in the U.S. Bankruptcy Court of Wilmington, Del., denied the insurer’s request to dismiss the bankruptcy on Monday. The judge said the insurer failed to show that it is in any immediate harm since Imerys doesn’t currently have a bankruptcy plan before the court. The judge said that RiverStone isn’t currently a creditor, but she left it open for the insurer to raise any harm from a future plan. Last year, Judge Silverstein ruled to disqualify decisive ballots cast in favor of a cancer-victim compensation plan, saying that most of the asbestos-injury clients represented by one law firm had no basis to vote.

U.S. prosecutors and several federal regulators are seeking information from bankrupt crypto lender Celsius Network Ltd., Bloomberg News reported. The inquiries, which were disclosed in court filings this month, provide a glimpse into the legal headaches that Celsius faces as it seeks to restructure. The company froze customer withdrawals in June in a bid to evade a panic run by users, then filed for bankruptcy in July. Celsius has been one of the more high-profile casualties of a steep selloff in digital assets that was fueled in part by May’s collapse of the Terra blockchain. Since declaring insolvency, Celsius has faced criticism from users over its marketing and management and is exploring a sale of some or all of its assets. The firm, which rocketed in popularity for paying people interest on virtual token deposits, received a federal grand jury subpoena on June 15, according to a document filed last week by lawyers for Celsius in federal bankruptcy court in Manhattan. The subpoena came from the U.S. District Court for the Southern District of New York. The company also received inquiries from the Commodity Futures Trading Commission, Securities and Exchange Commission, and Federal Trade Commission, according to a separate filing from the lawyers. One CFTC inquiry focused on trading activities related to TerraUSD and its sister token, Luna. Another one, according to the document, was titled “In the Matter of Certain Pending Persons Engaged In Fraud And Other Unlawful Conduct With Respect to Digital Asset Transactions,” the filing said.