Richard Branson’s aerospace company Virgin Orbit Holdings (VORB.O) has filed for Chapter 11 bankruptcy. The company did not secure sufficient funding to recover from a January satellite launch failure. The Long Beach, California-based corporation filed the case in the District of Delaware Bankruptcy Court. After announcing the layoffs of around 85% of its 750 employees last week, the company is looking to sell all of its assets. According to the statement, the company had total debt of $153.5 million as of Sept. 30 and assets of around $243 million. Virgin Orbit CEO Dan Hart stated,
“We believe that the Chapter 11 process represents the best path forward to identify and finalize an efficient and value-maximizing sale.”
Over 75% of the launch company was owned by Branson’s Virgin Group, which reportedly invested over $1 billion in the business, including $60 million in secured loans since November 2022. With a 17.9% interest in Virgin Orbit, Mubadala, the sovereign wealth fund of Abu Dhabi, was the second-largest investor. Virgin Orbit will receive $31.6 million in new funding from Virgin Investments, a division of Virgin Group, via debtor-in-possession finance. According to the companies, the move is intended to help support operations as it searches for a buyer.
Why did Richard Branson’s Virgin Orbit fail to get funding?
The aerospace industry, especially in the U.S., is making leaps and bounds in the area of innovation. Richard Branson’s Virgin Orbit faced stiff competition from Elon Musk’s SpaceX and Jeff Bezos‘ Blue Origin. Furthermore, the state-controlled entity, NASA, is one of the pioneers of the global space exploration initiative.
Virgin Orbit’s plan was to use a 747 in flight to launch tiny rockets, which would enable launch events on short notice from any location. However, there has been a movement in demand toward more affordable space travel and larger launch rockets. For the past two years, Virgin Orbit has faced increased competition as a result of SpaceX’s Falcon 9 rocket.
With its core LauncherOne rocket, Virgin Orbit’s sixth flight in January failed to reach orbit. The craft crashed its payload of U.S. and U.K. espionage satellites into the sea. After the rockets’ failure, the corporation frantically sought out new funding, stopping operations and furloughing almost all of its staff on March 15 to remain liquid.