Richard Branson's Virgin Orbit Goes Bankrupt

The rocket company founded in 2017 by the British billionaire is desperately looking for a buyer.

It's a sad day for the British aviation and space industry. 

A few months ago, the country's ambitions to become a space power seemed to be coming true. 

But in January, those hopes took a huge hit. Virgin Orbit, the rocket company founded in 2017 by knighted billionaire Sir Richard Branson, had decided to carry out the first rocket launch into space from the British soil.

The attempt was organized in collaboration with the British Space Agency and Spaceport Cornwall. Virgin Orbit wanted to launch nine satellites into space, which would have been a major first for the UK.

But the attempt was a resounding failure: An "anomaly” prevented the rocket from being put into orbit.

"The data is indicating that from the beginning of the second stage first burn, a fuel filter within the fuel feedline had been dislodged from its normal position," Virgin Orbit explained mid-February. "Additional data shows that the fuel pump that is downstream of the filter operated at a degraded efficiency level, resulting in the Newton 4 engine being starved for fuel. Performing in this anomalous manner resulted in the engine operating at a significantly higher than rated engine temperature."

'What Is Best for the Business'

The return to earth has been brutal since. 

Virgin Orbit  (VORB) , which is based in California, just filed for Chapter 11 bankruptcy, which means it can continue to do business while restructuring its debts,  "in order to effectuate a sale of the business," the company said in a statement on April 4.

The firm said it intends to use the Chapter 11 process to maximize value for its business and assets.

"The team at Virgin Orbit has developed and brought into operation a new and innovative method of launching satellites into orbit, introducing new technology and managing great challenges and great risks along the way," Dan Hart, Chief Executive of Virgin Orbit, said. "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."

The Chief Executive Officer added that: "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."

Virgin Orbit will receive $31.6 million from Virgin Investments, one of its sister companies, to stay afloat while it's looking for a buyer.

Stock Market Rout

Virgin Orbit stood out from rivals like Elon Musk's SpaceX. It wants to offer a fast and adaptable space launch service for small satellites weighing between 300 and 500 kg, a growing market. 

The 21-meter Virgin Orbit rocket, dubbed LauncherOne, does not take off vertically, but is attached under the wing of a modified Boeing 747 called "Cosmic Girl”. Once the correct altitude is reached, the plane releases the rocket, which starts its own engine to push itself into space and to place its cargo in orbit. 

Launching a rocket from an airplane is easier than a vertical take-off, because theoretically a simple airstrip is enough, instead of an expensive space launch pad, experts say. In summary, the advantage of this launch method is that it is more flexible and less expensive to put satellites into orbit than vertical rocket launchers. 

The January failure, however, weakened Virgin Orbit financially. In mid-March, the company had suspended its operations while it held discussions on possible sources of financing and explored strategic opportunities. It had indicated a few days later that it had resumed its activities.

But on March 30, the company again ceased its operations "for the foreseeable future” after failing to secure a funding lifeline. It announced in a regulatory filing that it is laying off 85% of its workforce, or 675 employees, "in order to reduce expenses in light of the company's inability to secure meaningful funding."

Those impacted are located in all areas of the firm, according to the document filed with the U.S. Securities and Exchange Commission.

Virgin Orbit went public, via a special purpose acquisition company, or SPAC, with a valuation of nearly $4 billion in December 2021. The market value is $67.4 million at last check.