Rocket manufacturer Virgin Orbit, owned by Sir Richard Branson, has declared bankruptcy in the US.
Three weeks ago, the company stated it would halt operations and lay off 85% of its workforce as it sought further capital.
Shares dropped 18.8% to 82 cents after the action.
After earlier reports that Sir Richard Branson had lost £1.5 billion on his investment in the past year, Virgin Investments added an additional £8.8 million to the operation on Friday.
‘At this stage, we believe that the Chapter 11 process represents the best path forward to identify and finalise an efficient and value-maximising sale,’ said Virgin Orbit CEO Dan Hart.
The company listed assets of about $243million and its total debt at $153.5million as of September 30 in the filing. Based in California, it has a workforce of around 750.
Hart added: ‘I’m incredibly grateful and proud of every one of our teammates, both for the pioneering spirit of innovation they’ve embodied and for their patience and professionalism as we’ve managed through this difficult time.
‘Today my thoughts and concerns are with the many talented teammates and friends now finding their way forward who have been committed to the mission and promise of all that Virgin Orbit represents. I am confident of what we have built and hopeful to achieve a transaction that positions our Company and our technology for future opportunities and missions.’
What is a Chapter 11 filing?
A case filed under chapter 11 of the United States Bankruptcy Code is frequently referred to as a ‘reorganisation’ bankruptcy. Usually, the debtor remains ‘in possession’, has the powers and duties of a trustee, may continue to operate its business, and may, with court approval, borrow new money.
A plan of reorganisation is proposed, creditors whose rights are affected may vote on the plan, and the plan may be confirmed by the court if it gets the required votes and satisfies certain legal requirements.
US Courts
The business originally grew as a spinoff from the British billionaire’s commercial space tourism business Virgin Galactic. Touted as a rival to Elon Musk’s SpaceX, the company aimed to launch rockets using a modified Boeing 747, named Cosmic Girl, rather than traditional vertical take-off rockets.
The company’s decision to choose Spaceport Cornwall, Newquay, for its first commercial satellite launch was seen as a huge boost for the UK space industry and the area, potentially creating hundreds of new jobs.
However, shortly after its initial take-off on Monday, January 9, the mission failed. After being released from the wing of the 747, the rocket failed to reach its final orbit, sending customers’ satellites back to Earth.
At the time, Hart said: ‘While we are very proud of the many things that we successfully achieved as part of this mission, we are mindful that we failed to provide our customers with the launch service they deserve.
‘The first-time nature of this mission added layers of complexity that our team professionally managed through. However, in the end a technical failure appears to have prevented us from delivering the final orbit. We will work tirelessly to understand the nature of the failure, make corrective actions, and return to orbit as soon as we have completed a full investigation and mission assurance process.’
January’s failed mission prompted MP Greg Clark, chairman of the Commons science and technology committee to call it a ‘disaster’ that an attempt to showcase the UK’s potential for commercial launches had turned ‘toxic for a privately funded launch’.