Virgin Orbit Holdings files for Chapter 11 bankruptcy after funding setback
The satellite launch company is seeking a sale of its assets after a rocket failure earlier this year led to a halt in operations and layoffs.
Virgin Orbit Holdings , the satellite launch company founded by billionaire Richard Branson, has filed for Chapter 11 bankruptcy after failing to secure the long-term funding needed to recover from a rocket failure earlier this year. The company, which air-launches rockets from beneath a modified Boeing 747 plane to send satellites into orbit, is seeking a sale of its assets through the bankruptcy process.
Background of Virgin Orbit Holdings
After going public through a blank-check deal in 2021, Virgin Orbit raised $255 million less than its initial expectations. The company was spun off from Branson’s space tourism firm, Virgin Galactic, in 2017. In January of this year, the company’s sixth mission failed to reach orbit, leading to a halt in operations and the furloughing of nearly all employees in March.
Layoffs and funding struggles
Last week, Virgin Orbit announced the layoff of roughly 85% of its 750 employees. The company had been scrambling to find new funding after the January rocket failure, but was unable to secure meaningful financing. Branson’s Virgin Group provided $50 million to the satellite launch company between November and March via debt secured against its equipment and other assets in the event of a bankruptcy, according to securities filings.
Virgin Investments Limited, a company owned by Branson, provided $10.7 million in funding to cover employee severance and other expenses related to the layoffs. Virgin Orbit estimated the layoffs would cost $15 million.
Details of the Chapter 11 filing
In the U.S. Bankruptcy Court for the District of Delaware, Virgin Orbit has filed for bankruptcy, listing assets worth approximately $243 million and a total debt of $153.5 million as of September 30. Virgin Investments has announced that it will offer $31.6 million in new money to Virgin Orbit via debtor-in-possession financing.
Market value drop
On Monday’s closing price, Virgin Orbit was valued at $65 million, which is significantly lower than its value of over $3 billion two years ago. The March 30 announcement of the layoffs came as a result of “the company’s inability to secure meaningful funding,” according to a statement from Virgin Orbit.
Conclusion
The filing for Chapter 11 bankruptcy by Virgin Orbit Holdings is a major setback for the company and for Richard Branson’s space ventures. The rocket failure earlier this year and the subsequent halt in operations and layoffs proved to be insurmountable challenges for the satellite launch company, which was unable to secure meaningful funding to recover. The Chapter 11 process will allow the company to seek a sale of its assets and potentially find a buyer that can help it bounce back from this setback. Nonetheless, the news of the bankruptcy filing is a reminder of the risks inherent in space ventures and the challenges of the commercialization of space.
