Virgin Orbit is submitting for Chapter 11 chapter safety

The company’s modified 747 “Cosmic Girl” jet in Mojave, California.

Virgo Orbit

Virgin Orbit filed for Chapter 11 bankruptcy protection in the US on Tuesday after failing to secure a lifeline for funding.

The California-based satellite launch company filed the petition in US bankruptcy court for the District of Delaware and intends to sell its assets.

It comes after CNBC received audio from Virgin Orbit CEO Dan Hart telling employees during an all-hands meeting last week that the company would be ceasing operations “for the foreseeable future.” The company also said it would lay off almost all of its workforce.

“While we have made great efforts to put our financial position in order and secure additional funding, ultimately we must do what is best for the company,” Hart said in a statement Tuesday.

“We believe the state-of-the-art introductory technology this team has developed will resonate with buyers as we continue the process of selling the company. At this point, we believe the Chapter 11 process is the best way to identify and complete an efficient and value-maximizing sale,” he added.

Virgin Orbit said it is focused on completing the sale process quickly to provide clarity on the company’s future.

Virgin Orbit said a commitment from Virgin Investments enabled the company to secure $31.6 million in new money through debtor-owned funding. This process, sometimes referred to as DIP funding, refers to the funding of companies that have filed for Chapter 11 bankruptcy protection so that they can continue to operate.

What happened?

Virgin Orbit has developed a system that uses a modified 747 jet to send satellites into space by dropping a rocket under the plane’s wing mid-flight.

The company’s final mission suffered an in-flight failure, with a problem during launch preventing the rocket from reaching orbit. It fell into the sea.

Virgin Orbit is among a select few US rocket companies to successfully get into orbit with a privately developed launch vehicle. It has launched six missions since 2020, counting four successes and two failures.

It has been seeking new funding for several months, with majority owner Richard Branson unwilling to continue funding the company.

Branson founded the company in 2017 and owns a 75% stake. Abu Dhabi sovereign wealth fund Mubadala holds the second largest stake at 18%.

The company began commercial services in 2021 and began public trading on the Nasdaq exchange after a so-called SPAC merger. The deal called for the company to be valued at nearly $4 billion at the time.

A significantly different picture is currently emerging. Virgin Orbit had a market value of around $65 million, according to Monday’s closing price.

“Today, my thoughts and concerns are with the many talented teammates and friends who are now finding their way forward and committed to the mission and promise of all that represents Virgin Orbit,” said CEO Dan Hart.

“I am confident in what we have built and hope to achieve a transaction that positions our company and technology for future opportunities and endeavors,” he added.

– CNBC’s Michael Sheetz contributed to this report.