Vector files for Chapter 11 bankruptcy
WASHINGTON — Small launch vehicle company Vector filed for Chapter 11 bankruptcy Dec. 13 as part of an agreement that could see some of its satellite technology assets sold to Lockheed Martin.
The company filed a voluntary petition for bankruptcy with the United States Bankruptcy Court for the District of Delaware, the state where the company was incorporated. Garvey Spacecraft Corporation, a wholly owned subsidiary of Vector, also filed for Chapter 11 in Delaware at the same time.
Vector had been one of the leading companies in the small launch vehicle market until August, when the company said that a “significant change in financing” led it to pause operations and lay off nearly all of its more than 150 employees. Jim Cantrell, Vector’s chief executive, also left the company at the time. That announcement came just two days after the company won an Air Force launch contract.
According to industry sources familiar with the company, the August layoffs were triggered when one of the company’s major investors, venture fund Sequoia, withdrew its support for the company because of concerns about how the company was managed. That came as Vector was working on a new funding round, and Sequoia’s decision had a domino effect, causing other investors to back out. Sequoia didn’t respond to a request for comment in August about any role it played in Vector’s problems.
The company is currently being funded through “debtor in possession” financing from Lockheed Martin, according to a resolution by Vector’s board of directors included in the filing. Under a Nov. 20 agreement, Lockheed provided Vector with a $500,000 secured loan and proposed purchasing Vector’s assets associated with a satellite program called GalacticSky for no more than $2.5 million.
While Vector was best known for its small launch vehicle development efforts, it undertook a separate project called GalacticSky to create software-defined satellites. That resulted in a number of patents on the technology and work on prototype satellites the company once planned to start launching this year.
It also led to a legal dispute with Lockheed Martin, which announced its own software-defined satellite technology, called SmartSat, in March. Vector filed suit against Lockheed Martin in a California court in April, alleging patent infringement. Vector withdrew the suit in July, citing ongoing negotiations with Lockheed.
The tensions between the companies were exacerbated by an April Fool’s joke that Lockheed released this year, offering “a fragrance designed to capture the aroma of space” called Vector. Vector the company took umbrage at this joke, noting that the logo used in the April Fool’s joke was similar to the company’s logo, with one Vector official calling the prank “an attempt to diminish our brand and our status.”
If the agreement is approved the bankruptcy court, another bidder could acquire the GalacticSky assets with a higher, better offer. Vector’s remaining assets, the agreement stated, would be sold at auction “or other process designed to maximize value.”