Branson’s Virgin Orbit Files for Bankruptcy After Failed Rocket Launch

The Virgin Orbit's LauncherOne rocket at Spaceport Cornwall, at Cornwall Airport in Newquay, England, in an undated photo provided on March 16, 2023. UK Space Agency via AP

Virgin Orbit filed for Chapter 11 bankruptcy after failing to get additional funding from its backers.

The Long Beach, California-based satellite launch company, founded and owned by Richard Branson, failed to secure long-term funding it needed to recover from a January rocket failure in the United Kingdom.

Branson had long had an ambition to become a key player in the rapidly growing market for commercial satellite launches.

The case, filed under 23-10405 in U.S. Bankruptcy Court for the District of Delaware to sell off its assets, came after the firm admitted last week that it would lay off roughly 85 percent of its workforce of 750.

“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,” Virgin Orbit CEO Dan Hart said in a statement on April 4.

“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.

CNBC had earlier obtained audio of Dan Hart telling employees during an all-hands meeting on March 30 that the company would be ceasing operations “for the foreseeable future“ and would lay off nearly all of its workforce.

A copy of Virgin Orbit bankruptcy filing listed its remaining assets at about $243 million and total debt at $153.5 million, as of Sept. 30, reported Reuters.

Executives said they were firmly focused on concluding its sale process to provide investors with clarity on the company’s future, according to CNBC.

Virgin Rocket Company Fails After Optimistic Start

The satellite rocket company, which went public in 2021 as a blank-check start-up, raised $255 million less than expected from investors, after being spun off from Branson’s space tourism firm Virgin Galactic, in 2017.

The company began commercial services in 2021 and began publicly trading on the Nasdaq after a so-called SPAC merger, which saw it valued at nearly $4 billion at the time.

Virgin Group, which controlled roughly 75 percent of the launch company, had initially invested over $1 billion in the start-up, including $60 million in secured loans since last November.

“However, this significant funding was not enough to counter the strong headwinds and liquidity challenges Virgin Orbit continues to face,” a Virgin spokesperson told Business Insider.

Abu Dhabi’s sovereign wealth fund Mubadala was the second-biggest investor in Virgin Orbit, with a 17.9 percent stake.

Virgin Orbit’s LauncherOne rocket was launched via an unconventional technique to send satellites into orbit.

Its small rocket design was air-launched beneath a modified Boeing 747 plane in mid-flight, which quickly allowed payload deliveries anywhere from around the globe.

Virgin Orbit was one of the few U.S.-based rocket companies to successfully achieve orbit with a privately developed launch vehicle. It had launched six missions since 2020, including four successes and two failures.

However, there has more of a trend toward larger traditional rockets and more cost-effective shared -aunch vehicles, like that of Branson’s rival, Elon Musk’s SpaceX Falcon 9 rocket.

Musk’s company has been quickly surpassing Virgin Orbit over the past two years, with major upgrades of its systems, analysts and industry executives told Reuters.

Virgin Orbit’s sixth mission in January, which was its the first rocket launch out of the United Kingdom, failed spectacularly after its attempt to reach orbit suffered technical issues in mid-flight, sending its payload of high-tech satellites owned by U.S. and UK intelligence agencies to plunge directly into the ocean.

The disaster led Virgin Orbit to immediately find new funding after the incident and was forced to halt operations, while putting nearly all its staff leave on March 15 to conserve its remaining liquidity.

The company has been looking for new investors for several months, with Branson, the majority owner, unwilling to fund the company further.

Investors Bail on Satellite Launch Start-Up

Virgin Investments, another unit of Virgin Group, said it will provide $31.6 million in new funds to Virgin Orbit through debtor-in-possession (DIP) financing to keep operations running while it looks for a buyer.

DIP financing refers to funding for businesses that have filed for Chapter 11 bankruptcy protection to allow them to keep operating.

Last month, Texas-based venture capital investor Matthew Brown reportedly held negotiations with Virgin executives to invest $200 million in the company, but the talks fell through last week, according to Reuters.

Reuters reported that Virgin Orbit’s bankruptcy filing revealed that its largest creditor was London-based Arqit Ltd., which was owed almost $10 million for services and as a customer deposit.

Arqit Quantum and Virgin Orbit had announced in 2021 a plan to launch two satellites that would provide orbital encryption services for the Anglophone “Five Eyes” nations—United States, the United Kingdom, Canada, Australia, and New Zealand.

However, Arqit Quantum said in December 2022 that it would drop out of satellite development efforts after it found another way to provide secure encryption through an unspecified “ground infrastructure,” reported Reuters.

Virgin Orbit’s second-largest creditor was the United States Space Force, which, according to the filing, had a deposit of almost $6.8 million for future satellite launches.

The satellite launch company had a remaining market value of $65 million as of closing on April 3, a massive plunge from more than $3 billion two years ago.

“Today my thoughts and concerns are with the many talented teammates and friends now finding their way forward who have been committed to the mission and promise of all that Virgin Orbit represents,” Hart said.

“I am confident of what we have built and hopeful to achieve a transaction that positions our company and our technology for future opportunities and missions,” he added.

Reuters contributed to this report.