Virgin Orbit plans bankruptcy amid bailout talks with investors | business news

Virgin Orbit has begun making detailed contingency plans for its bankruptcy days after ceasing operations and furloughing its workforce.

Sky News has learned that the commercial space satellite company was founded by Mr Richard BransonVirgin Group’s is working with restructuring firms Alvarez & Marsal (A&M) and Ducera on fallback plans in the event new funding cannot be secured.

The decision to hire the consultants underscores the precarious nature of Virgin Orbit’s finances, even as the company remains in talks with a small number of potential investors to provide sufficient funding to resume operations.

Virgin Orbit is 75% owned by Sir Richard’s holding company, whose shares are listed on the Nasdaq stock exchange in New York.

Its value has fallen further following the failure of its first British mission in Cornwall in January.

Having gone public in 2021 via a merger with a special purpose vehicle in a $3.7 billion (£3bn) deal, the listed shares are now valued at just $217m (£177m).

Sources said the bankruptcy planning work involving A&M and Ducera was conducted out of the US.

A&M was also working on plans for the administration of Virgin Atlantic Airways as it sought to recapitalize during the COVID-19 pandemic.

The identities of the parties interested in ongoing Virgin Orbit funding were unclear as of Sunday night, although a source said Boeing, which has previously invested in the company, is not in talks with him.

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Virgin Orbit is understood to aim to raise additional capital later this week, they added.

Virgin Orbit chief executive Dan Hart has hoped to launch another mission in the coming weeks, but that prospect is slim unless the company can secure fresh capital.

A spokesman for Virgin Orbit said last week: “Virgin Orbit is initiating a company-wide pause in operations effective March 16, 2023 and expects to provide an update on continued operations in the coming weeks.

“On the operational side, our investigation is almost complete and our next production rocket with the required modification is in the final stages of integration and testing.”

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Sources close to the Virgin Group said Sir Richard’s private empire had backed Virgin Orbit with more than $1bn (£818bn), including $60m (£49m) since November 2022.

An insider said the funds made available to the company were not sufficient to deal with the severe headwinds and liquidity crisis.

Virgin Orbit is confident it is taking decisive action to protect employees and company assets while continuing to evaluate alternative options, they added.

Founded in 2017, Virgin Orbit focuses on conducting small commercial satellite launch missions from a converted Virgin Atlantic Boeing 747 aircraft.

According to a spokesman, the company has conducted four successful missions and placed 33 satellites in their desired orbits.

Virgin Orbit’s IPO, valued at multi-billion dollars, was seen as a validation of Sir Richard’s efforts to build a lucrative space technology business empire.

In 2019, he merged Virgin Galactic, his space tourism company, with Social Capital Hedosophia, another SPAC, in a deal that heralded the ongoing tide of so-called “blank check” companies.

Virgin Orbit was spun off from Virgin Galactic and has been run for years by Mr. Hart, a former Boeing executive.