Virgin Orbit filed for bankruptcy on Monday (April 3), a move that comes shortly after the satellite launch company failed to secure two financing deals and furloughed most of its staff.
The California-based company has started the process for a Chapter 11 bankruptcy, which is commonly known as "reorganization bankruptcy" and allows the company to continue basic operations while it looks for a buyer. Virgin Investments Limited, which is also part of billionaire Richard Branson's Virgin Group and owns 75% of Virgin Orbit, will provide $31.6 million in support to keep the company afloat until its sale, according to a company statement released on 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. Virgin Orbit raised $228 million from this merger — less than half of the $483 million it had projected. In its most recent quarterly earnings report, issued in November 2022, the launch provider noted that it was operating at a loss of $50.5 million.
Virgin Orbit's "Start Me Up" mission suffered a rocket launch failure in January 2023 due to a technical error, resulting in the loss of nine customer satellites. By mid-March, the company had paused operations and announced layoffs for about 90% of its workforce. Last week, the company was in conversation with two financers but failed to secure a deal, which seemed to be the last straw and the determining factor behind the company's decision to file for bankruptcy.
The company was valued at $65 million at the end of Monday (April 3) and had its shares plummet by 24% on Tuesday (April 4) soon after it announced bankruptcy, Reuters' Joey Roulette reported early on Tuesday.
Virgin Orbit said that it "is focused on a swift conclusion to its sale process" and has filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware. Its first hearing will be held virtually via Zoom on Wednesday (April 5) at 1:30 pm EST (1730 GMT).
The company said it has already submitted the required documents for approval from the Delaware court to use the company's cash in hand, which was $71 million according to the company's last quarterly earnings report. The company also needs approval from the Delaware court to access Virgin Investments' $31.6 million. These funds will be used to support the Chapter 11 bankruptcy process, "including payment of remaining employee wages and benefits without interruption," Virgin Orbit representatives wrote in the statement.
In the same statement, Virgin Orbit CEO Dan Hart credited the company for developing a "new and innovative method" to launch satellites into orbit and expressed confidence that the company would get a buyer interested in using the tech to loft satellites in the future. (Virgin Orbit employed an air-launch system, in which a carrier plane hauled a rocket high into the sky and dropped it at altitude.)
"While we have taken great efforts to address our financial position and secure additional financing, we ultimately must do what is best for the business," Hart said. "We believe that the cutting-edge launch technology that this team has created will have wide appeal to buyers as we continue in the process to sell the company."