Long Beach, Calif., based Virgin Orbit filed for Chapter 11 bankruptcy protection April 3.
The company told the U.S. Bankruptcy Court in the District of Delaware that it is looking to sell off its assets.
The filing went on to say that Virgin Orbit had secured $31.6 million in debtor-in-possession financing from Virgin Investments Ltd. Virgin Investments is owned by Sir Richard Branson, who founded Virgin Orbit.
According to Dan Hart, Virgin Orbit CEO, once financing is approved by the court, the funds would provide the company the liquidity to continue operating as it looks for buyers.
“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,” Hart said.
What is ‘best for the business,’ includes “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.
In its filing with the court, the company said it has between 200 and 999 estimated creditors. As of Sept. 30, it had about $243 million in total assets, and $153.3 million in total liabalities.
Early in March, Virgin Orbit said it has ‘paused’ all work but did not say how long that pause would last. Then, at the end of March the company announced it was laying off 675 people – about 85 percent of the total workforce.
The bankruptcy filing comes a day after the company had informed the Securities and Exchange Commission that it would be unable 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 12 months from the expected issuance date of the Form 10-K,” the company said in its SEC filing.
The LauncherOne program started as an initiative within Virgin Galactic in 2012. The rocket was designed to be launched from the WhiteKnightTwo aircraft used by Virgin Galactic for its SpaceShipTwo suborbital spaceplane. The company scaled up the rocket, and in 2015 announced it had acquired a Boeing 747 from Virgin Atlantic to serve as the launch platform.
Virgin Orbit was spun off to create Virgin Orbit in 2017 to target the market for small satellite launch. The company’s LauncherOne rockets are launched mid-air from a modified Boeing 747 based at the Mojave Air and Space Port. This should allow for more flexibility than launching from fixed sites.
Virgin Orbit had several successful launches from its base in Mojave, launching satellites for private business and the U.S. government, over the Pacific Ocean off the coast of Southern California. But its most recent launch, from the southwest England, ended in failure. In its March 31 layoff announcement, the company said an investigation found the rocket’s fuel filter had become dislodged causing an engine to overheat, and other components to malfunction.
The company’s shares, which are listed on the Nasdaq stock exchange, fell 24 percent before the opening bell on April 4, and are now worth about 15 cents. Two years ago, shares traded above $10.