Virgin Orbit stocks sank 14% in premarket following news that the company was filing for Chapter 11 bankruptcy proceedings. The company also plans to lay off nearly all its workers after failing to secure funding for its space missions.
Is Virgin Orbit out of business?
California-based satellite launch company Virgin Orbit filed for Chapter 11 bankruptcy proceedings on April 4, 2023, due to funding issues. It submitted its decrement to the U.S. Bankruptcy Court in Delaware, looking to liquidate all its assets.
Dan Hart, the company’s CEO, spoke about the matter, saying that the steps taken are currently best for the company despite their previous efforts.
“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,” he added; 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.”
The company added that it had obtained $31.6M in funding from Virgin Investments via “debtor in possession” financing. This financing process allows businesses that have filed for Chapter 11 bankruptcy protection to keep operating.
Why did the company go under?
A series of difficult situations befell Virgin Orbit, forcing it to want to cease operations. The company was founded in 2017 by Richard Branson, who also owns a 75% stake. The second largest stakeholder is Abu Dhabi sovereign wealth fund Mubadala.
The space company designed its rockets to be set in orbit by modified Beoing 747 jets. It has launched six missions since 2020, with four successes and two failures. However, its last mission suffered mid-flight failure resulting in the rocket’s crash into the ocean.
Since then, it failed to secure funding for several months, with its majority owner Richard Branson unwilling to fund it further. As a result, it reached the inevitable point of filing for bankruptcy. Keep watching Fintech Express for more finance-related news.