California: Virgin Orbit has announced the decision to file for bankruptcy after the layoff of around 85% of employees last week and failing to secure long-term funding to help its recovery from a January rocket failure, the firm announced on Tuesday.
The ambition of the California-based firm was to stand out in the space launch business, which is dominated by its competitors like Elon Musk's SpaceX.
Under US law, Chapter 11 is often called "reorganization bankruptcy" and is used by businesses that want to continue operating but need time to restructure their finances and debt.
"At this stage, we believe that the Chapter 11 process represents the best path forward to identify and finalize an efficient and value-maximising sale," Virgin Orbit CEO Dan Hart said in a statement.
Consequences from failed mission
Virgin Orbit is a satellite-launching company that spun off of British billionaire Richard Branson's space tourism venture Virgin Galactic in 2017.
The company sends satellites into orbit by a process called "air-launching", where a modified Boeing 747 plane is used to release a rocket mid-flight.
The sixth mission of the company in January was its first international launch and the first rocket launch out of UK soil, with its centerpiece LauncherOne rocket. The mission failed to reach orbit after a reported anomaly, with US and UK intelligence satellites plunging into the ocean.
Between November and March, Branson's Virgin Group provided $50 million (€45.8 million) to the satellite launch company via debt secured against its equipment and other assets in the event of a bankruptcy.
In the bankruptcy filing, the company has listed assets of about $243 million (€222.8 million) and its total debt at $153.5 million (€140.8 million) as of September 30th.
Who is funding Virgin Orbit?
Richard Branson's Virgin Group owns 75% of the satellite launch company. Virgin Investments, a unit of Virgin Group, has said it will provide $31.6 million (€29 million) in new money to help Virgin Orbit while it looks for a buyer in bankruptcy.
Abu Dhabi's sovereign wealth fund Mubadala was the second-biggest investor in Virgin Orbit with a 17.9% stake.
The bankruptcy filing revealed that Virgin Orbit's largest creditor is the London-based Arqit Ltd, a quantum encryption company, with an almost $10 million (€9.1 million) in investments.
It's second largest creditor is the United States Space Force, which had a deposit of almost $6.8 million (€6.2 million) for future launches.
Virgin Orbit's shares on the New York Stock Exchange were down 3% on Monday evening.