Richard Branson’s Virgin Orbit Holdings, which has been struggling to keep up its operations after failing to find required funding, has filed for Chapter 11 bankruptcy. The space launch provider plans to continue the sale process under the Chapter 11 protection to provide clarity on its future.
The company’s latest issues started with a rocket failure in January that added to its severe financial struggles following losses for many quarters. The company was seeking a funding lifeline to move forward, but due to its absence, it had paused all its operations in mid March and also planned to furlough nearly all of its employees.
Virgin Orbit recently said that it was reducing its workforce due to an inability to raise sufficient out-of-court capital to continue operating its business at the current run-rate.
The company reportedly planned to cut 675 jobs or 85 percent of its workforce by April 3. The estimated aggregate charges related to the job cuts would be approximately $15 million, to be recognized in the first quarter of 2023.
Virgin Orbit and its U.S. subsidiaries have now commenced a voluntary proceeding under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court in the District of Delaware.
In the interim, Virgin Orbit will continue operating in the ordinary course as a “debtor-in-possession” under the jurisdiction of the bankruptcy court.
To help fund the process and protect its operations, the company has the support of Virgin Investments Limited in the form of debtor-in-possession or DIP financing, and has received a commitment for $31.6 million.
Upon approval from the Bankruptcy Court, the DIP financing would provide Virgin Orbit with the necessary liquidity to continue operating as it furthers the marketing process commenced pre-petition to sell the company.
Dan Hart, CEO of Virgin Orbit, said, “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. 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.”
Virgin Orbit, founded by Branson in 2017, began commercial service in 2021, and has already delivered commercial, civil, national security, and international satellites into orbit. Virgin Orbit’s LauncherOne rockets are designed and manufactured in Long Beach, California. The rockets are air-launched from a modified 747-400 carrier aircraft that allows the firm to operate from locations all over the world.
The company, which had successfully launched 33 satellites into their precise orbit, on January 9 suffered a mid-flight failure with its Start Me Up mission, and the rocket crashed into the ocean without reaching the orbit.
The flight conducted by Virgin Orbit’s air-launched LauncherOne system from UK was the first orbital launch attempt in history conducted from western Europe.
Signaling the mounting issues with the company, CEO Hart recently had canceled a scheduled appearance on a panel during a space industry conference in Washington, D.C.
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