WASHINGTON, April 4 (Reuters) – Richard Branson’s Virgin Orbit Holdings ( VORB.O ) filed for Chapter 11 bankruptcy on Tuesday after the satellite launch company failed to secure long-term funding following the January rocket failure.
The Long Beach, California-based company filed in U.S. Bankruptcy Court for the District of Delaware to sell its assets after announcing last week that it would lay off about 85% of its 750 employees.
“We believe the Chapter 11 process represents the best path to identify and finalize an efficient and value-maximizing sale,” Virgin Orbit CEO Dan Hart said in a statement.
Shares of the company fell 18% in pre-market trading.
The company had about $243 million in assets and total debt of $153.5 million as of September.
Virgin Orbit went public in 2021 through an empty check deal, raising $255 million less than expected.
In 2017, Virgin Orbit, from Branson’s space tourism company Virgin Galactic, launched rockets from the underside of a modified Boeing ( BA.N ) 747 to send satellites into orbit.
Virgin Orbit’s strategy is to launch smaller rockets from the 747, addressing a need highlighted by the conflict in Ukraine, allowing for short-notice launches from anywhere, including tactical military objectives.
But demand for larger launch rockets and more cost-effective shared rides on SpaceX’s Falcon 9 rocket over the past two years have boosted Virgin Orbit’s competitive stakes, analysts and industry executives said.
Virgin Orbit’s sixth mission in January saw its centerpiece LauncherOne rocket, the first rocket launch from Britain, fail to reach orbit and plunge its payload of commercial and defense-related research satellites into the ocean.
The company scrambled to find new funding after the rocket failure, halted operations and laid off all its employees on March 15 to save money.
The UK Space Agency said the company’s future was a commercial matter. With two vertical-launch space stations due to be launched next year, Britain is committed to being a major provider of commercial small satellite launches.
Virgin Group Finance
Branson’s Virgin Group, which owns roughly 75% of the publishing company, said it has invested more than $1 billion in the unit since November, including $60 million in secured loans.
Abu Dhabi’s sovereign wealth fund Mubadala is the second largest investor in Virgin Orbit with a 17.9% stake.
Virgin Investments, a unit of Virgin Group, will provide $31.6 million in new cash to Virgin Orbit through financing activities through a debt-equity fund, the companies said.
Despite the success of his travel and telecommunications businesses, billionaire Branson has been associated with several high-profile business failures in an entrepreneurial career since the 1970s.
Reuters reported last month that Texas-based Matthew Brown was in talks to invest $200 million in the company. Those talks collapsed, sources told Reuters last week.
Virgin Orbit’s market value was $65 million based on Monday’s closing price, up from more than $3 billion two years ago.
Virgin Orbit’s bankruptcy filing showed its biggest debt was to London-based Arkit Ltd., which owed it nearly $10 million in services and customer deposits. Arkith declined to comment when contacted by Reuters.
In 2021, Arkit Quantum ( ARQQ.O ) and Virgin Orbit announced a deal for two satellite launches to provide encryption services to the “Five Eyes” countries: the United States, the United Kingdom, Canada, Australia and New Zealand.
Arqit Quantum said in December that it was abandoning its satellite development efforts and had found a way to provide secure encryption through an unspecified “ground infrastructure.”
Virgin Orbit’s second-largest creditor is the United States Space Force, which has nearly $6.8 million in deposits for future launches.
The U.S. Space Force, an arm of the U.S. military, had no immediate comment.
Reporting by Joey Rowlett in Washington, Jahnavi Nidumolu in Bangalore, Kevin Grolicki in Singapore and Tim Heber in Paris; Editing by Jamie Freed and Jason Neely
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