Virgin Orbit declared bankruptcy on Monday April 3, just days after failing to secure two financing deals and furloughing the majority of its employees.
The California-based company has begun the process of filing for Chapter 11 bankruptcy, also known as “reorganization bankruptcy,” which allows the company to continue basic operations while it seeks a buyer. According to a company statement(opens in new tab) released on Monday, 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 (April 3).
Virgin Orbit, which was founded in 2017, went public in August 2021 by merging with a special purpose vehicle.
Due to a technical error, Virgin Orbit’s “Start Me Up” mission failed to launch in January 2023, resulting in the loss of nine customer satellites. By mid-March, the company had halted operations and laid off roughly 90% of its workforce. Last week, the company met with two financiers but failed to close a deal, which appeared to be the final straw and the deciding 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 drop by 24% on Tuesday (April 4) shortly after declaring bankruptcy, according to Reuters’ Joey Roulette(opens in new tab) early on Tuesday.
According to Virgin Orbit, it “is focused.”
The company stated that it has already submitted the necessary documents to the Delaware court for approval to use the company’s cash in hand, which was $71 million according to the company’s most recent quarterly earnings report. The company also needs Delaware court approval to access Virgin Investments’ $31.6 million.
According to Virgin Orbit representatives, the funds will be used to support the Chapter 11 bankruptcy process, “including payment of remaining employee wages and benefits without interruption.”
Virgin Orbit has filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware, stating that it is focused on a swift conclusion to its sale process.Its first hearing will be held virtually via Zoom on Wednesday April opens in new tab.
In the same statement, Virgin Orbit CEO Dan Hart praised the company for developing a “new and innovative method” of launching satellites into orbit and expressed confidence that the company would find a buyer interested in using the technology to loft satellites in the future. Virgin Orbit used an air-launch system, in which a carrier plane lifted a rocket into the sky and dropped it at a high altitude.
