Virgin Orbit Holdings (VORB.O), founded by billionaire Richard Branson, filed for Chapter 11 bankruptcy on Tuesday after the satellite launching business struggled to secure long-term funding following a failed launch in January.
The filing comes less than two years after Virgin Orbit first went public at a valuation of roughly $3 billion. But the January mishap left the company scrambling for new funding and forced it to halt operations.
“We believe that the Chapter 11 process represents the best path forward to identify and finalize an efficient and value-maximizing sale,” Virgin Orbit Chief Executive Dan Hart said in a statement.
The company, which was spun off from space tourism firm Virgin Galactic in 2017, sends satellites into orbit using rockets launched from a modified Boeing (BA.N) 747 plane.
The Long Beach, California-based company lodged the filing seeking a sale of its assets in a Delaware court days after announcing the layoff of roughly 85% of its 750 employees.
Virgin Orbit listed assets of about $243 million and total debt at $153.5 million as of Sept. 30. The company went public in December 2021 through a blank-check merger, raising $255 million less than expected.
The company was valued at $65 million at the close of trading Monday. On Tuesday, its shares shed 24% to trade at a mere 15 cents each.
The company’s sixth mission in January using its centerpiece LauncherOne rocket, the first rocket launch out of Britain, failed to reach orbit, sending its payload of commercial and defence-related research satellites plunging into the ocean.
The mishap involving the UK’s Cornwall Spaceport forced the company to halt operations and furlough nearly all of its employees in March to conserve cash.
Virgin Orbit was set up to launch small rockets and offer short-notice launches from anywhere, including for tactical military purposes, addressing a need highlighted by the conflict in Ukraine.
But demand for larger launch rockets and more cost-effective shared payload launches into space on SpaceX’s Falcon 9 rocket over the past two years raised the competitive stakes.
Venture investments in space startups have dropped 50% year-over-year in 2022 to $21.9 billion, according to VC firm Space Capital, as the cost of capital has increased with global interest rate hikes.
“The changing capital markets and higher interest rate environment made obtaining new capital difficult,” Hart said in a court declaration. The company also is experiencing “heavy pricing pressure from well-capitalized competitors in the commercial launch market,” he said.
The UK Space Agency said Britain, which has two vertical-launch spaceports due for debuts next year, remains committed to being a key provider of commercial small satellite launches.
Two satellite makers which lost high-tech payloads in the failed January launch, Britain’s Space Forge and Poland’s SatRev, in which Virgin Orbit owns 4%, said they had backup plans for alternative launch vehicles as needed.
Branson’s Virgin Group, which owns roughly 75% of the launch company, said it had invested over $1 billion in the unit, including $60 million in secured loans since November.
Abu Dhabi’s sovereign wealth fund Mubadala is the second-biggest investor with a 17.9% stake.
Virgin Investments, a unit of Virgin Group, will provide $31.6 million to Virgin Orbit while it looks for a buyer, the companies said.
Despite the success of his travel and telecommunications businesses, Branson has been associated with a number of high-profile business failures in a career dating to the 1970s.
Virgin Orbit’s largest creditor is London-based Arqit Ltd, which was owed almost $10 million for services and as a customer deposit, the filing showed.
Arqit declined to comment.
In 2021, Arqit Quantum (ARQQ.O) and Virgin Orbit announced a deal for two satellite launches 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 satellite development efforts and had found a way to provide secure encryption through an unspecified “ground infrastructure”.
The U.S. Space Force, part of the American military, was Virgin Orbit’s second-largest creditor with a deposit of almost $6.8 million for future launches. It had no immediate comment.