In an unsurprised announcement, British billionaire Sir Richard Branson’s rocket company Virgin Orbit on Tuesday filed for Chapter 11 bankruptcy protection in the U.S. after failing to secure a funding lifeline. In a filing at the U.S. Bankruptcy Court in the District of Delaware, the California-based satellite launch company said it’s looking to sell its assets, Reuters reported.
The news comes just four days after the company announced it was laying off approximately 85% of its workforce after the January mishap left the space company scrambling for new funding and forced it to cease operations.
Last week, Virgin Orbit failed to secure funding from Texas-based venture capital investor Matthew Brown via a private share placement to prepare for its next mission. In January, Virgin Orbit rocket LauncherOne launched from a jumbo jet suffered an anomaly that prevented it to deploy nine small satellites into lower Earth orbit.
“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 in a statement Tuesday.
“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. At this stage, we believe that the Chapter 11 process represents the best path forward to identify and finalize an efficient and value-maximizing sale,” he added.
Virgin Orbit said a commitment from Virgin Investments had allowed the company to secure $31.6 million in new money through “debtor-in-possession” financing. This process, also known as DIP financing, “refers to funding for businesses that have filed for Chapter 11 bankruptcy protection to allow them to keep operating.”
Founded in 2017 by billionaire Richard Branson as a subsidiary of Virgin Group, a British multinational conglomerate, Virgin Orbit’s mission is to provide affordable and flexible launch services for small satellites, using a unique air-launch system that enables rockets to be launched mid-flight from a modified Boeing 747 aircraft named “Cosmic Girl”.
The company went public in July 2019 through a special purpose acquisition company (SPAC) deal. The SPAC, named Social Capital Hedosophia, was created by venture capitalist Chamath Palihapitiya and was specifically established to acquire a technology company and take it public.
Through the deal, Virgin Orbit received approximately $480 million in funding, which it planned to use to further develop its small satellite launch capabilities. However, since the SPAC deal, Virgin Orbit has faced financial challenges and has struggled to secure additional funding. As a result, the company’s market capitalization has decreased significantly, as mentioned in the previous question.
Meanwhile, it’s worth noting that the SPAC deal that took Virgin Orbit public is separate from the SPAC deal that Richard Branson’s other space company, Virgin Galactic, used to go public in 2019. The two companies are focused on different areas of the space industry, with Virgin Galactic focusing on space tourism and Virgin Orbit specializing in satellite launches.
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- Source: https://techstartups.com/2023/04/04/virgin-orbit-files-for-bankruptcy/
