Virgin Orbit, owned by Richard Branson, declares bankruptcy.

Virgin Orbit made an announcement on Tuesday that they plan to file for bankruptcy. This decision comes after they laid off about 85% of their workforce last week and failed to obtain sufficient long-term funding to aid in their recovery following a rocket failure that took place in January.

The goal of the company based in California was to set itself apart in the field of space exploration, which is mainly dominated by other noteworthy companies such as SpaceX, owned by Elon Musk.

In American legislation, Chapter 11 is commonly referred to as "reorganization bankruptcy" and is utilized by corporations that plan to keep running their business but require a period to reorganize their money and liabilities.

Virgin Orbit CEO, Dan Hart, stated that they have concluded that Chapter 11 process is the most suitable approach to discover and conclude a beneficial and revenue-generating sale.

The aftermath of a failed mission

In 2017, a company named Virgin Orbit was created as a satellite-launching business, breaking off from a space tourism venture owned by British billionaire Richard Branson called Virgin Galactic.

The enterprise launches satellites into space through a technique known as "air-launching" in which they release a rocket when a modified Boeing 747 is flying.

In January, the company carried out its sixth mission which was also their first international launch and the first time a rocket was launched from the UK soil. The main attraction of this mission was their LauncherOne rocket. Unfortunately, the mission was a failure as the rocket failed to reach orbit due to an unspecified error. As a result, both US and UK intelligence satellites were lost and ended up in the ocean.

From November to March, the Virgin Group owned by Branson lent $50 million (€45.8 million) to the satellite launching company. This loan is secured by the company's equipment and other assets in case they declare bankruptcy.

The company has filed for bankruptcy and has stated that its assets are valued at approximately $243 million (€222.8 million) while it owes a total of $153.5 million (€ 140.8 million) as of September 30th.

Who is financing Virgin Orbit?

Virgin Group, a company owned by Richard Branson, controls 75% of the business that launches satellites into space. Another entity under the same group, called Virgin Investments, has publicly announced that it will infuse $31.6 million (equivalent to €29 million) worth of fresh funds into Virgin Orbit. This move is aimed at supporting Virgin Orbit while it is currently pursuing its search for a buyer as it undergoes bankruptcy proceedings.

Mubadala, the sovereign wealth fund of Abu Dhabi, held the second-largest investment in Virgin Orbit by possessing a significant stake of 17.9%.

According to the bankruptcy filing, Arqit Ltd - a quantum encryption firm based in London - is Virgin Orbit's biggest debtor, having invested nearly $10 million (€9.1 million) in the company.

The United States Space Force is the second largest creditor of this company. They have deposited almost $6.8 million (€6.2 million) for their upcoming launches.

On Monday evening, the value of stocks in Virgin Orbit decreased by 3% on the New York Stock Exchange.