Virgin Orbit Holdings (NASDAQ:VORB) announced this morning that it would declare bankruptcy. In the wake of the news, VORB stock is tumbling 23% in pre-market trading to 15 cents.
The bankruptcy filing came after the satellite launcher laid off about 85% of its employees and stopped its operations on March 30 after it could not obtain additional funding.
More About the Filing
Within the bankruptcy filing, Virgin Orbit stated that it had $243 million of assets and over $153 million of debt.
Virgin Orbit, which has ties to British billionaire Richard Branson, stated that it would obtain $31.6 million of debtor-in-possession (“DIP”) financing from Virgin Investments Limited. Richard Branson owns the latter firm.
According to Reuters, Virgin Orbit intends to seek to sell itself.
VORB Stock: A Failed Launch Led to Bankruptcy
In January, Virgin Orbit’s rocket malfunctioned, causing the satellites it was carrying to drop into the ocean.
In the wake of that failure, the company could not obtain enough funding to continue its operations.
Virgin Orbit and Virgin Galactic
Virgin Orbit was spun off from Virgin Galactic (NYSE:SPCE). The latter company, which plans to take wealthy consumers to the edge of space, has also had a significant amount of trouble.
Investment bank Bernstein noted in September 2022 that, over the preceding two years, the company had often postponed its launches and had to “redesign… elements of its platform,” while frequently needing to obtain more cash.
Additionally, Virgin had to delay the start of its commercial operations for many months, the firm stated. SPCE currently intends to start commercial operations during the current quarter.
Still, given Virgin Galactic’s past problems and its debt-to-equity ratio as of the end of last quarter was 99, SPCE may have to declare bankruptcy at some point as well.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
