Richard Branson's Virgin Orbit rocket firm files for bankruptcy
- Richard Branson's Virgin Orbit rocket firm has filed for Chapter 11 bankruptcy.
- It failed to secure funding to continue operations.
Richard Branson's Virgin Orbit filed for Chapter 11 bankruptcy protection on Tuesday after it failed to secure funding to continue operations, the rocket launch company said in a statement.
"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," Dan Hart, the CEO of California-based Virgin Orbit, said in the statement.
The rocket launch company listed assets of about $243 million and total debt of $153.5 million as of September 30, 2022, according to a copy of the company's bankruptcy filing seen by Insider.
Virgin Investments, another of Branson's firms, provided $31.6 million in fresh funds to Virgin Orbit while it seeks a new buyer, according to the company statement.
Virgin Orbit filing for Chapter 11 bankruptcy protection means the company can continue to operate while it attempts to restructure its debts. This is unlike a Chapter 7 filing wherein a company's assets are liquidated to pay its creditors.
Branson and the Virgin Group have supported Virgin Orbit over the long term, investing more than $1 billion in the Company, including $60 million since November 2022, according to a company spokesperson.
"However, this significant funding was not enough to counter the strong headwinds and liquidity challenges Virgin Orbit continues to face," the spokesperson added.
Founded by Branson in 2017, Virgin Orbit went public in a SPAC merger in 2021. The company was spun off from Virgin Galactic, the space tourism company.
Virgin Orbit specialized in launching small satellites and has successfully sent 33 of them into orbit, according to the company. In January, it tried to deliver nine satellites from the UK into orbit but failed to complete the mission.
The company announced last Thursday it was laying off 85% of its staff and ceasing operations "for the foreseeable future," according to audio of an all-hands meeting obtained by CNBC.
The case is 23-10405, US Bankruptcy Court for District of Delaware.
Virgin Orbit's share price is down 27% in premarket trade. The stock is down 90% so far this year.
April 4, 2023, 4.04 p.m. SGT: This story has been updated to include further details of the bankruptcy filing.
April 4, 2023, 5.17 p.m. SGT: This story has been updated to include Virgin Orbit's share price movement and a comparison of a Chapter 11 filing versus a Chapter 7.