Space-launch start-up Virgin Orbit filed for bankruptcy protection in a US court on 4 April, a move coming 16 months after the company became publicly traded amid wide fanfare.
Long Beach-based Virgin Orbit, which is majority owned by Richard Branson, says its cash reserves have recently dwindled as its debt piled up.
The company, which launches satellites from a Boeing 747, intends to continue operating under bankruptcy court protection as it seeks to be purchased by another firm.
“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,” says Virgin Orbit chief executive Dan Hart. “We believe that the Chapter 11 process represents the best path forward to identify and finalise an efficient and value-maximising sale.”
Virgin Orbit filed for bankruptcy protection in US Bankruptcy Court for the District of Delaware.
“The company is focused on a swift conclusion to its sale process in order to provide clarity on the future of the company to its customers, vendors and employees,” says Virgin Orbit. “In the interim, Virgin Orbit will continue operating.”
An affiliated company called Virgin Investments – owned by Branson’s Virgin group – has committed to provide Virgin Orbit with $31.6 million in additional financing. Those funds are “expected to provide Virgin Orbit with the necessary liquidity to continue operating”, the firm says.
The bankruptcy filing follows news late last month that Virgin Orbit had laid off some 675 employees – about 85% of its workforce.
On 3 April, the company disclosed in a securities filing that it had not, as of the end of 2022, “generated sufficient revenues to provide sufficient cash flows to enable us to finance our operation”.
Virgin Orbit has not reported its 2022 financial results. But the company says it “expects to report” a loss of $191 million for the year. It estimates it generated $33 million in revenue last year and that it ended the year with “an accumulated deficit” of $1 billion, and with cash and cash equivalents valued at $51 million.
Branson, via Virgin Group and other affiliated companies, owns 75% of Virgin Orbit’s publicly traded stock, securities filings show.
In August 2021, Virgin Orbit revealed plans to become publicly traded by merging with an already public “special purpose acquisition company” (SPAC) called NextGen Acquisition Corp II.
At the time, start-ups in a range of industries were pursuing mergers via the then-wildly popular SPAC-merger process, raising billions of dollars at a time when investment for ambitious projects was easy to attract.
Virgin Orbit and NextGen Acquisition projected that, once public, Virgin Orbit’s revenue would surge to $331 million in 2023 and $2 billion in 2026.
Virgin Obit completed the merger, becoming publicly traded, in December 2021.
The company is now progressing with an effort to sell itself – a process started prior to its bankruptcy filing, Virgin Orbit says.
Virgin Orbit puts satellites into orbit using a modified 747-400 called “Cosmic Girl”, which carries its two-stage launch vehicle, LauncherOne, to high altitude.
“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,” Virgin Orbit says.