Virgin Obit: Launch company files for bankruptcy in US
Just as namesake ISP Virgin Media* falls silent out of respect
Space launch outfit Virgin Orbit has filed for bankruptcy in the US just days after suspending operations and laying off most of its staff. The company said it intends to continue trying to sell the business while under Chapter 11 protection.
This morning the biz confirmed that Virgin Orbit Holdings and its US subsidiaries have entered into a voluntary proceeding under Chapter 11 of the US Bankruptcy Code, and plan to use some $31.6 million in funding provided by Virgin Investments Limited to continue operating while they seek a buyer for the going concern.
This move follows Virign Orbit's decision last week to reduce its workforce by 85 percent following a failure to raise sufficient out-of-court capital to continue normal operations. Last-minute attempts to secure funding were still being made as late as Friday.
Virgin Orbit was set up as a spin-off from Virgin Galactic in 2017 to offer a satellite launch service using a LauncherOne rocket vehicle that is carried to high altitude and deployed from under the wing of a modified Boeing 747 named Cosmic Girl. This was intended to greatly reduce the cost of launching small satellites into space.
Its first attempt at a launch from UK soil earlier this year ended ignominiously when LauncherOne left Earth's atmosphere but failed to deliver its payload of satellites to their desired orbits due to an unexpected anomaly. However, the company, founded by billionaire Sir Richard Branson, was already burning through cash before the setback that seems to have turned into a major crisis for the business.
A February update from Virgin Orbit on the launch anomaly said investigators were focused on a fuel filter within the fuel feedline in the LauncherOne vehicle that appeared to have been dislodged from its normal position from the beginning of the second stage first burn.
The fuel pump downstream of the filter was then operating at a degraded efficiency level, resulting in the Newton 4 engine being starved of fuel. This anomalous condition resulted in the engine operating at a higher than rated temperature, causing components in the vicinity to malfunction and leading to the second stage thrust to terminate prematurely.
Virgin Orbit CEO today Dan Hart praised his team for bringing into operation a new and innovative method of launching satellites, and noted that the company had performed several successful missions, including launching 33 satellites into orbit.
However, he conceded that: "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," Hart said.
- Virgin Orbit lays off 85% of staff as funding deal falters
- Matthew Brown Companies confirms it's in funding talks with Virgin Orbit
- Terran 1, world's first (mostly) 3D printed rocket, lifts off ... and fails to reach orbit
- Capital crunch: Virgin Orbit confirms all ops on pause until Tuesday
This is not quite the end for Virgin Orbit, as the company will continue operating as a "debtor-in-possession" under the jurisdiction of the bankruptcy court and in accordance with the US Bankruptcy Code.
"Chapter 11 is not a liquidation proceeding like you might think of in other geographies. Nor is it equivalent to a UK Administration proceeding,” said Rachel Chesley, senior managing director of Strategic Communications at FTI Consulting, which acts as a financial advisor to Virgin Orbit.
"It represents an opportunity for a company to operate in the ordinary course with its management team in place while it works to address financial challenges. In Virgin Orbit's case, this means continuing an expeditious sale process that maximizes value," Chesley said.
Virgin Orbit said it is now focused on a swift conclusion to its sale process in order to provide clarity on the future of the business for customers, vendors, and employees. ®
* Yes, we know, Liberty Global already "sucked the soul" out of the Virgin-branded biz back in 2013, but like many businesses, it opted to keep the bearded one's branding, first acquired after a 2006 merger of NTL:Telewest with Branson's mobile telephone business, Virgin Mobile. Thanks go to reader Wolftone, who told the joke in the comments forum of our Virgin Media outage story first!