Virgin Orbit filed for bankruptcy on Monday (April 3), a move that comes shortly after the satellite launch company failed to secure two funding deals and laid off most of its staff.
The California-based company has entered the process of Chapter 11 bankruptcy, commonly known as “reorganization bankruptcy” and allows the company to continue its basic operations while it searches for a buyer. Virgin Investments Limited, which is also part of the billionaire Richard Bransonof the Virgin group and owns 75% of pristine orbitwill provide $31.6 million in support to keep the business afloat until it is sold, according to a company statement (opens in a new tab) released Monday, April 3.
Virgin Orbit, founded in 2017, went public in August 2021 by merging with a special purpose acquisition company (SPAC) named NextGen Acquisition Corp. II. pristine orbit raised (opens in a new tab) $228 million from this merger – less than half of the $483 million it had projected. In its latest quarterly earnings report, released in November 2022, the launch vendor noted that it was operate at a loss of $50.5 million.
Related: Virgin Orbit launch failure leaves opportunity open for UK as space ‘underdog’
Virgin Orbit “Start Me Up” mission suffered a rocket launch failure in January 2023 due to a technical error, resulting in the loss of nine client satellites. By mid-March, the company had ceased operations and announced layoffs for approximately 90% of its workforce. Last week, the company was in conversation with two funders but failed to reach an agreementwhich seemed to be the straw that broke the camel’s back and the determining factor in the company’s decision to file for bankruptcy.
The company was valued at $65 million at the end of Monday (April 3) and saw its shares plunge 24% on Tuesday (April 4) shortly after announcing bankruptcy, Reuters’ Joey Roulette reported (opens in a new tab) early Tuesday.
Virgin Orbit said it was “focused on quickly closing its sale process” and filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware. His first hearing will take place (opens in a new tab) virtually via Zoom on Wednesday, April 5 at 1:30 p.m. EST (5:30 p.m. GMT).
The company said it had already submitted the required documents for Delaware court approval to use the cash in hand, which was $71 million according to the company’s latest quarterly earnings report. The company also needs Delaware court approval to access Virgin Investments’ $31.6 million. These funds will be used to support the Chapter 11 bankruptcy process, “including paying employees’ remaining salaries and benefits without interruption,” Virgin Orbit representatives wrote in the statement.
In the same statement, Virgin Orbit CEO Dan Hart thanked the company for developing a “new and innovative method” to launch satellites into orbit and expressed confidence that the company would inspire a buyer to use the technology to launch satellites in the future. (Virgin Orbit used an air launch system, in which a carrier aircraft carried a rocket high in the sky and dropped it from altitude.)
“While we’ve been working hard to turn around our financial situation and secure additional funding, ultimately we have to do what’s best for the business,” Hart said. “We believe the cutting-edge launch technology this team has created will be very attractive to buyers as we continue the process of selling the business.”