WASHINGTON — Virgin Orbit is proposing a rapid sale of the company or its assets in bankruptcy, hoping to conclude the process before the end of May.
In a motion filed with federal bankruptcy court in Delaware April 7, Virgin Orbit provided a schedule for an “expedited” sale of the launch company through a bidding process that would solicit bids in early May, concluding with an auction on May 18.
Virgin Orbit filed for Chapter 11 bankruptcy April 4 after failing to raise money needed to continue operations. The company had, days earlier, laid off about 85% of its workforce as its cash reserves dwindled.
The company said in the filing that it hopes to attract other interest in the company than before that Chapter 11 filing, including those interested in only some of its assets rather than the entire company. It is working with Ducera Partners LLC, an investment banker, to help market the company and its assets.
Ducera, it stated in the filing, has “already begun the postpetition marketing process in connection with the filing of these Chapter 11 Cases, contacting all parties from the prepetition process as well as additional potential purchasers, including those who may be interested in only a subset of the Assets.” That ongoing marketing effort “will include a broader universe of potential buyers than the prepetition process,” the company added.
Other filings made as part of the bankruptcy case show that Virgin Orbit had been struggling financially since the completion of its SPAC merger at the end of 2021, which netted the company far less money than expected when most of the SPAC shareholders redeemed their stock. Virgin Orbit received only $67.8 million in SPAC proceeds versus the potential total of $382 million.
“Since the de-SPAC, the Company has pursued a broad range of strategic transactions designed to address its continuing liquidity needs,” Dan Hart, chief executive of Virgin Orbit, said in an affidavit filed as part of the Chapter 11 proceedings. That included working with Goldman Sachs in early 2022, shortly after the completion of the SPAC merger, to either raise capital or pursue a sale of the company.
Virgin Orbit “received responses from several parties potentially interested in participating in varying transactions,” Hart stated, but could not complete a deal. The company’s Jan. 9 LauncherOne failure resulted in “negative publicity and further challenges in identifying a buyer or capital source,” he added.
Hart noted that the company “received one indication of interest with respect to a sale from a potential buyer, and one indication of interest with respect to a structured financing transaction,” but that both efforts ended shortly before the Chapter 11 filing. He did not disclose the parties Virgin Orbit had been in talks with, but one is Texas investor Matthew Brown, who publicly said he was planning to buy the company in late March. That deal fell through, reportedly because of concerns about his ability to follow through on a transaction of up to $200 million.
Virgin Orbit shares continue to be traded on the Nasdaq since the Chapter 11 filing, closing April 10 at 16.75 cents. The company said after the close of trading that it has been informed by Nasdaq that, because of the Chapter 11 filing and a lack of a Form 10-K filing with the Securities and Exchange Commission, trading of its shares would be suspended effective at the opening of business April 13 as part of the delisting process. Virgin Orbit said it would appeal the delisting effort but added that would not affect the upcoming suspension of trading.