WASHINGTON -- Richard Branson's Virgin Orbit Holdings filed for Chapter 11 bankruptcy on Tuesday after the satellite launch company failed to secure the long-term funding needed to help it recover from a January rocket failure.
The Long Beach, California-based company lodged the filing in the U.S. Bankruptcy Court for the District of Delaware seeking a sale of its assets after announcing the layoff of roughly 85% of its 750 employees last week.
"We believe that the Chapter 11 process represents the best path forward to identify and finalize an efficient and value-maximizing sale," Virgin Orbit CEO Dan Hart said in a statement.
The company listed assets of about US$243 million and total debt at $153.5 million as of Sept. 30 in the filing.
Virgin Orbit went public in 2021 through a blank-cheque deal, raising $255 million less than expected. Spun off from Branson's space tourism firm Virgin Galactic in 2017, Virgin Orbit air-launches rockets from beneath a modified Boeing 747 plane to send satellites into orbit.
Virgin Orbit's strategy has been that launching small rockets from a 747 in flight would allow for short-notice launches from anywhere.
But a shift in demand toward larger launch rockets and more cost-effective shared rides to space on SpaceX's Falcon 9 rocket over the past two years raised the competitive stakes for Virgin Orbit, analysts and industry executives have said.
Virgin Orbit's sixth mission in January with its centrepiece LauncherOne rocket, the first rocket launch out of Britain, failed to reach orbit and sent its payload of U.S. and U.K. intelligence satellites plunging into the ocean.
The company scrambled to find new funding after the rocket failure, halting operations and furloughing nearly all its employees on March 15 to conserve cash.
VIRGIN GROUP FUNDING
Branson's Virgin Group, which owned roughly 75% of the launch company, said it had invested over $1 billion in the unit, including $60 million in secured loans since November.
Abu Dhabi's sovereign wealth fund Mubadala was the second-biggest investor in Virgin Orbit with a 17.9% stake.
Virgin Investments, a unit of Virgin Group, will provide $31.6 million in new money to Virgin Orbit through debtor-in-possession financing to fund operations while it looks for a buyer in bankruptcy, the companies said.
Despite the success of his travel and telecommunications businesses, billionaire Branson has also been associated with a number of high-profile business failures in an entrepreneurial career that dates back to the 1970s.
Reuters reported last month that Texas-based Matthew Brown had been in talks to invest $200 million in the company. Those talks collapsed, sources told Reuters last week.
Virgin Orbit had a market value of $65 million based on Monday's closing price, down from more than $3 billion two years ago. Shares fell 12% in pre-market trading on Tuesday.
Virgin Orbit's bankruptcy filing showed its largest creditor as London-based Arqit Ltd, which was owed almost $10 million for services and as a customer deposit. Arqit declined to comment when contacted by Reuters.
In 2021, Arqit Quantum and Virgin Orbit announced a deal for two satellite launches intended to provide encryption services to the "Five Eyes" nations: the United States, the United Kingdom, Canada, Australia and New Zealand.
Arqit Quantum said in December it would abandon its satellite development efforts and had found a way to provide secure encryption through an unspecified "ground infrastructure."
Virgin Orbit's second-largest creditor was the United States Space Force, which had a deposit of almost $6.8 million for future launches, according to the filing.
The U.S. Space Force, a branch of the U.S. military, had no immediate comment.
Reporting by Joey Roulette in Washington, Jahnavi Nidumolu in Bengaluru and Kevin Krolicki in Singapore; Editing by Jamie Freed
