Richard Branson's rocket firm Virgin Orbit files for bankruptcy

2023-04-07

Billionaire Richard Branson’s rocket firm Virgin Orbit files for bankruptcy after failing to secure investment

It comes after the satellite launch company failed to secure long-term funding
The California-based company lodged the filing in the U.S Bankruptcy court for the District of Delaware

Richard Branson’s Virgin Orbit Holdings filed for Chapter 11 bankruptcy on Tuesday after the satellite launch company failed to secure the long-term funding needed to help it recover from a January rocket failure.

The Long Beach, California-based company lodged the filing in the U.S. Bankruptcy Court for the District of Delaware seeking a sale of its assets after announcing the layoff of roughly 85% of its 750 employees last week.

‘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,’ Virgin Orbit CEO Dan Hart said in a statement.

The company listed assets of about $243 million and total debt at $153.5 million as of Sept. 30 in the filing.

Virgin Orbit went public in 2021 through a blank-check deal, raising $255 million less than expected. Spun off from Branson’s space tourism firm Virgin Galactic in 2017, Virgin Orbit air-launches rockets from beneath a modified Boeing 747 plane to send satellites into orbit.

The Virgin Orbit building is seen after the company paused operations last week, in Long Beach, California

Virgin Orbit Holdings filed for Chapter 11 bankruptcy on Tuesday after the satellite launch company failed to secure the long-term funding needed to help it recover from a January rocket failure

Virgin Orbit’s strategy has been that launching small rockets from a 747 in flight would allow for short-notice launches from anywhere.

But a shift in demand toward larger launch rockets and more cost-effective shared rides to space on SpaceX’s Falcon 9 rocket over the past two years raised the competitive stakes for Virgin Orbit, analysts and industry executives have said.

Virgin Orbit’s sixth mission in January with its centerpiece LauncherOne rocket, the first rocket launch out of Britain, failed to reach orbit and sent its payload of U.S. and UK intelligence satellites plunging into the ocean.

The company scrambled to find new funding after the rocket failure, halting operations and furloughing nearly all its employees on March 15 to conserve cash.

How Virgin tycoon Richard Branson built his multi-billion empire

The Virgin brand took off with Virgin Records in 1972.

The tycoon Sir Richard Branson is the founder and chair of the Virgin Group, which employs over 60,000 people in 35 countries through its 40 plus companies.

The empire burgeoned in the 1960’s, as a 16-year-old Branson launched his magazine, called Student, which interviewed celebrities and sold almost $8,000 worth of advertising for the first issue.

Following this, he dropped out of school to promote the magazine and in 1970, launched Virgin Mail Order Records.

He used the profits from his record store chain to found music label Virgin Records in 1972, and he earned his first million dollars in 1973 when Virgin recording artist Mike Oldfield sold over 5 million copies of his record, ‘Tubular Bells.’

In the 1980’s, Branson launched Virgin Book, Virgin Video and Virgin Atlantic, which took off due to its first-class service, free ice cream, video screens and in-flight massages.

In 1992, Branson reluctantly sold Virgin Records for $1 billion in order to keep Virgin Atlantic afloat during a tumultuous period for the venture – including a climate of fear pulsed on by terrorist attacks.

In 2001, Virgin Group launched Virgin Mobile as a joint venture with Sprint.

Virgin Galactic was launched in September 2004 alongside Burt Rutan, an American aeronautical engineer. Branson’s vision was of cheap space tourism.

Branson has four space-focused companies now. In addition to Virgin Galactic, Virgin also operates Virgin Orbit for cargo, VOX for government missions, and the Spaceship Company, which as the name implies, builds spaceships.

Branson’s Virgin Group, which owned roughly 75% of the launch company, said it had invested over $1 billion in the unit, including $60 million in secured loans since November.

Virgin Investments, a unit of Virgin Group, will provide $31.6 million in new money to Virgin Orbit through debtor-in-possession financing to fund operations while it looks for a buyer in bankruptcy, the companies said.

Reuters reported last month that Texas-based Matthew Brown had been in talks to invest $200 million in the company. Those talks collapsed, sources told Reuters last week.

Virgin Orbit had a market value of $65 million based on Monday’s closing price, down from more than $3 billion two years ago.

Virgin Orbit’s bankruptcy filing showed its largest creditor as London-based Arqit Ltd, which was owed almost $10 million for services and as a customer deposit. Arqit had no immediate comment.

In 2021, Arqit Quantum and Virgin Orbit announced a deal for two satellite launches intended to provide encryption services to the ‘Five Eyes’ nations: the United States, the United Kingdom, Canada, Australia and New Zealand.

Arqit Quantum said in December it would abandon its satellite development efforts and had found a way to provide secure encryption through an unspecified ‘ground infrastructure.’

Virgin Orbit’s second-largest creditor was the United States Space Force, which had a deposit of almost $6.8 million for future launches, according to the filing.

The U.S. Space Force, a branch of the U.S. military, had no immediate comment.

Sir Richard Branson has four space-focused companies.

In addition to Virgin Orbit (which is used for cargo-carrying), he has Virgin Galactic for space tourism, VOX for government missions, and the Spaceship Company, which builds rockets.

The tycoon’s company reached the edge of space in his Virgin Galactic rocket plane in July 2021. The plane, known as Unity, reached a height of 53.5 miles, or 282,480 feet.

Richard Branson has a net worth of $4 billion, according to Forbes. However, according to Bloomberg, Branson has a net worth of $5.65 billion.

The majority of his wealth comes from Virgin Group, and investment company comprising over 40 businesses.

Much of his wealth is tied Virgin Enterprises – his licensing company – as well as his 75% stake in Virgin Orbit.

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