Virgin Orbit Holdings Inc., a space transportation company founded by British billionaire entrepreneur Richard Branson and headed by CEO Dan Hart, filed for Chapter 11 bankruptcy protection in Delaware on Tuesday. The move comes after the failure of its sixth mission in January, resulting in an inability to secure long-term funding for its operations and forcing the suspension of about 85% of its 750 employee workforce.
At the time of its bankruptcy filing, Virgin Orbit listed assets of around $243 million and total debt of $153.5 million, per 30 September. The company had gone public in December 2021 but the launch failure in the first months of 2022 caused it to struggle to remain afloat. The company’s shares dropped 23% on Tuesday, closing at 15 cents each.
The bankruptcy filing puts a spotlight on Virgin Orbit’s repeated failed attempts to launch its centerpiece LauncherOne rocket, following the January mishap which saw a payload of commercial and defence-related research satellites plunge into the ocean. This was the first launch made from Britain’s Cornwall Spaceport. The setback marked a significant decrease in demand for the company’s services and forced it to pivot its operations and look for alternative funding methods.
Virgin group, 75% stakeholder with famed Richard Branson at the helm, has already invested beyond the $1 billion mark in the unit, including $60 million in secured loans since November. It unexpectedly provided $31.6 million to Virgin Orbit while the company is actively seeking a buyer. Mubadala, the Abu Dhabi sovereign wealth fund, is the second major stakeholder at 17.9%.
The company had so far competed successfully in the Spaceport sector, offering short-notice launches from anywhere. But competition was heated- up as SpaceX’s Falcon 9 rocket lowered the cost of payload launches and turned out to be more cost-effective. A decrease in venture investments in space startups fell by 50% year-over-year further worsened the funding situation.
Tony Gingiss, who was until Monday Virgin Orbit’s chief operating officer, sent an email to employees apologizing for the situation. He believes that company leadership should have acted sooner, a sentiment echoed by many other former employees. The small fraction of staff remaining are in charge of operations in case a suitable buyer is found.
Richard Branson is no stranger to failure in the business world, as some of his ventures and projects have not panned out to be successful. In the space industry however, he is a pioneer, and by venturing into space tourism and satellite launching, he has enabled humanity to reach the stars.
Virgin Orbit and its ongoing bankruptcy proceedings provide a lesson for managing funds and expectations and understanding the market dynamics. Despite the failed launch, there is no shortage of potentials and with the right strategy, Virgin Orbit could soon become a leading player in the space industry yet again.
