Virgin Orbit files for bankruptcy
WASHINGTON — Launch company Virgin Orbit filed for Chapter 11 bankruptcy April 4, having failed to achieve financial orbit after burning through more than $1 billion.
The company said it filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in the District of Delaware as part of efforts to sell the company, after failing to line up financing to sustain the company in recent weeks. That led the company to lay off about 85% of its 800-person workforce March 30.
“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,” Dan Hart, chief executive of Virgin Orbit, said in a statement about the filing.
That involves, Virgin Orbit stated, a “swift conclusion to its sale process in order to provide clarity on the future of the Company to its customers, vendors, and employees.” That includes trying to find a buyer for the company rather than just selling off its assets.
“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.
The company reported in its bankruptcy filing $243 million in total assets and $153.5 million in debts. Its largest creditors include several who have paid customer deposits, such as Arqit, iQPS and the U.S. Space Force.
Virgin Orbit has secured $31.6 million in debtor-in-possession financing from Virgin Investments Limited (VIL), the investment arm of the Virgin Group. VIL had provided $60 million in loans between November and February as the company’s cash reserves diminished, and an additional $10.7 million March 30 to cover much of the severance and related costs of its layoffs.
In its Chapter 11 filing, the company says it tried to find “various alternative financing options” to stabilize the business but found no other options. Other potential investors raised concerns that included lack of familiarity with the launch industry and broader market conditions, such as volatility in the banking sector.
> The filing comes a day after Virgin Orbit, whose stock is traded on the Nasdaq, informed the Securities and Exchange Commission that it would not be able to file an annual report known as Form 10-K in time.
“Based on currently available information, management anticipates that it will be disclosing in the Form 10-K that the Company’s liquidity condition raises substantial doubt about the Company’s ability to continue as a going concern for at least twelve months from the expected issuance date of the Form 10-K,” the company said in its SEC filing.
In the filing, the company said it expected that Form 10-K would show that the company generated $33.1 million in revenue in 2022 but recorded a net loss of $191.2 million. The company had $51.2 million in cash and equivalents on hand as of the end of 2022.
The company had been in danger of running out of cash for months as filings showed declining reserves amid steady losses. Those problems were exacerbated by the Jan. 9 failure of its LauncherOne rocket on what was to be the first orbital launch from the United Kingdom, with the company’s plane flying out of Spaceport Cornwall in southwestern England.
LauncherOne started as a project within another Virgin company, Virgin Galactic. Unveiled in 2012, LauncherOne was originally designed to make use of the same WhiteKnightTwo aircraft used by Virgin Galactic’s SpaceShipTwo suborbital spaceplane. The company scaled up the rocket and, in 2015, announced it acquired a Boeing 747 from the airline Virgin Atlantic to serve as the vehicle’s launch platform.
In 2017, Virgin Galactic spun off the LauncherOne effort into a new company, Virgin Orbit, hiring Hart, a longtime Boeing executive, to run the company. The company was gearing up at the time for a first launch in 2018.
That launch slipped, though, until 2020, and failed to reach orbit. The company did successfully place satellites into orbit on its second launch in January 2021. However, the company struggled to increase its launch rate, which it needed to generate revenue to cover the high costs of operating the overall system. The company performed one more launch in 2021 and two in 2022 before the failed U.K. launch in January.
In its April 3 SEC filing, Virgin Orbit said it has an accumulated deficit over the company’s history of $1.01 billion.
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