XCOR Aerospace files for bankruptcy

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WASHINGTON — XCOR Aerospace, a company that for nearly 20 years had been working on rocket engines and a suborbital spaceplane, filed for bankruptcy Nov. 8 after it was unable to line up new investors.

The company filed paperwork with the U.S. Bankruptcy Court for the Eastern District of California, seeking bankruptcy under Chapter 7, which calls for liquidation of the company’s assets. XCOR is headquartered in Midland, Texas, with facilities in Mojave, California. The filing was first reported by Parabolic Arc.

The company had, in recent weeks, been trying to line up investors or other partners that could keep the company alive. Michael Blum, a member of the board of directors of XCOR who took over as chief executive at the end of June, said in an Oct. 19 interview that the company had only a few weeks to reach an agreement or it would run out of money.

“By early November, either one of these deals pulls the trigger and saves XCOR, or we file for Chapter 7,” he said at the time.

Blum, in a Nov. 9 email to investors and shareholders in the company obtained by SpaceNews, said time ran out on the company’s efforts. “Today it is my sad duty to inform you that XCOR has failed,” he wrote. “Our effort to find a financial future for XCOR has not succeeded.”

Blum said the company had discussions with several potential partners, including one that involved joining a consortium led by a “large aerospace firm” working to develop space access systems in the United Kingdom. Another suitor, discussions with whom started just a couple weeks ago, was interested in XCOR’s capabilities but lacked the financial resources needed for a deal.

Blum said that the company’s senior secured creditor, not identified in the message, “became difficult to work with, necessitating a bankruptcy filing.”

According to its bankruptcy filing, XCOR has more than 100 creditors, although none are identified as the senior secured creditor who reportedly triggered the filing. The creditors listed in the filing include a mix of individuals, companies and government organizations.

XCOR, in its filing, listed estimated assets of between $1 and 10 million, with estimated liabilities of between $10 and 50 million.

XCOR was founded by four former employees of Rotary Rocket Company in 1999 after that company, which was developing a reusable launch vehicle called Roton, changed propulsion systems. XCOR developed a number of engines, including versions flown on a modified Long-EZ airplane called EZ-Rocket.

XCOR is best known in the industry for Lynx, a suborbital spaceplane announced in 2008 designed to carry one pilot and one spaceflight participant. The vehicle was designed to take off from a runway under rocket power and fly a suborbital arc, gliding back to a runway landing.

The company, though, was never able to complete the initial prototype of Lynx. In 2016, the company announced it was laying off approximately half of its employees and shelving work on Lynx to focus on an engine project under a contract with United Launch Alliance.

At the end of June, the company said it was laying off the rest of its employees due to “adverse financial conditions,” hiring a few back as contractors. Jay Gibson, the former chief executive of XCOR who left in June when nominated to a Defense Department position, told senators at his July confirmation hearing that a sudden termination of a contract from a larger, but unnamed, company led to those layoffs.

XCOR is not the first suborbital spaceflight company to go out of business. In 2013, John Carmack, the videogame developer who founded Armadillo Aerospace more than a decade earlier, announced the company was in “hibernation mode” after he ran out of money to fund its operations. Armadillo later ceased operations entirely, although many of its former employees now work for Exos Aerospace, another company working on suborbital vehicles.

Blum, in his note, thanked investors and shareholders who “supported XCOR financially and in so many other ways.” He also sounded optimistic about the future of the industry in general despite the failure of XCOR itself.

“The advent of entrepreneurial endeavors has led to significant cost reductions in recent years,” he wrote. “This trend will continue and with it low cost access to space for humans will arrive. I am certain of this.”