British billionaire Richard Branson’s rocket company Virgin Orbit Holdings filed for bankruptcy protection in the U.S. on Tuesday ahead of an effort to sell the company.
The California-based company said in a statement early Tuesday that it filed for Chapter 11 protection for the parent organization and several subsidiaries in U.S. Bankruptcy Court in Delaware.
It will continue operating under Chapter 11, though the announcement comes after the company said in a regulatory filing on Thursday that it would lay off 675 employees, or about 85% of its staff.
Shares of Virgin Orbit Holdings dropped 4 cents, or more than 20%, to just over 15 cents in Tuesday trading.
The company, which is a spinoff of Branson’s space tourism business Virgin Galactic, went public in March 2021 via combination with a special purpose acquisition company, or SPAC. The stock was never highly valued and hit its all time high of $10.63 in June of that year, ahead of Branson’s historic trip into space. Branson’s June 11, 2021, flight made him the first person to ride into space aboard a rocket he helped fund, and took place amid a billionaire’s “space race” with Jeff Bezos, who flew into orbit a month later.
“While we have taken great efforts to address our financial position and secure additional financing, we ultimately must do what is best for the business,” Dan Hart, chief executive of Virgin Orbit, said in a statement on the company website. Hart also praised the company’s achievements, which included bringing an innovative method of launching satellites into orbit that has seen 33 successful launches. “We believe that the cutting-edge launch technology that this team has created will have wide appeal to buyers as we continue in the process to sell the company.”
Branson has invested more than a billion dollars into the company that competes with Elon Musk’s SpaceX, using modified Boeing 747 planes to launch satellites into space. A high profile failed launch in January in the U.K. was one of the catalysts for the company’s decline.
The additional financing comes in the form of $31.6 million from Virgin Investments, which is typically Branson’s acquisitions and investment arm. The money will enable the company to keep operating while it searches for a buyer.
The company also sold a $10.9 million convertible note — a type of short-term debt — to Virgin Orbit Holdings, Inc., which is wholly owned by Branson’s Virgin Group, last week.
Virgin Orbit said in the filing it will book about $15 million in charges related to the layoffs and wind down of its business.
“I am confident of what we have built and hopeful to achieve a transaction that positions our company and our technology for future opportunities and missions,” Hart said.
