Virgin Orbit has filed for Chapter 11 bankruptcy protection in the United States as it struggles to secure additional funding. The satellite launch firm submitted the filing to the U.S. Bankruptcy Court in the District of Delaware and intends to sell its assets. This follows CNBC's acquisition of audio from an all-hands meeting where CEO Dan Hart informed employees that the company would halt operations "for the foreseeable future" and lay off most of its workforce.
Hart said in a statement on Tuesday, "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." He expressed confidence that the innovative launch technology developed by the team would appeal to potential buyers and that the Chapter 11 process would offer the most efficient way to maximize value and finalize a sale.
Virgin Orbit is focusing on expediting the sale process to provide clarity regarding the company's future. Thanks to a commitment from Virgin Investments, the company has secured $31.6 million in new money through "debtor-in-possession" financing, which allows businesses that have filed for Chapter 11 bankruptcy protection to continue operating.
Virgin Orbit developed a unique system that utilizes a modified 747 jet to launch satellites into space by dropping a rocket from beneath the aircraft's wing during flight. However, the company's latest mission experienced an in-flight failure, with an issue during the launch preventing the rocket from reaching orbit and causing it to crash into the ocean.
Since 2020, Virgin Orbit has launched six missions, with four successful outcomes and two failures. It is one of the few U.S. rocket companies to have reached orbit with a privately developed launch vehicle. Over the past several months, the company has sought new funding, as majority owner Richard Branson showed reluctance to provide further financial support.
Branson, who founded Virgin Orbit in 2017, holds a 75% stake in the company, while Abu Dhabi's sovereign wealth fund Mubadala owns an 18% share. The company began offering commercial services in 2021 and went public on the Nasdaq stock exchange following a SPAC merger, which valued the company at nearly $4 billion at the time.
However, Virgin Orbit's current market value is significantly lower, standing at approximately $65 million based on Monday's closing price. CEO Dan Hart expressed his concern for the many talented employees affected by the situation, stating, "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 remains optimistic about the future, adding, "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."
