Richard Branson’s Virgin Orbit Staring at Bankruptcy This Week in Absence of Deal

As per the latest development, Richard Branson‘s Virgin Orbit might slip into insolvency ahead of this week in absence of a deal. Amid the current macro condition, the company has been struggling to secure a funding lifeline and avoid bankruptcy.

Last week, Virgin Orbit decided to pause all of its operations and furloughed its employees. Over the last weekend, Virgin Orbit CEO Dan Hart and other senior executives held key talks with interested parties, said the sources familiar with the matter on the condition of anonymity.

During the open meeting last week, Hart told employees that the company is looking to give an update on the situation as early as this Wednesday. Virgin Orbit has also been burning cash with its experiments failing to see success. Two months back, the company faced a mid-flight rocket failure while attempting to send the satellite to orbit from Cornwall, England. This led to a 20% fall in the company’s stock price.

On Monday, the VORB stock ended 20% in the red with another 4.5% fall in the after-market hours. As of yesterday’s closing, the VORB stock is currently trading at $0.51.

The top-tier talent at Virgin Orbit has already decided for moving away and are looking for new jobs. As per reports, nearly 750 employees at Virgin Orbit are searching for jobs elsewhere. As per the CNBC report, this talent ranges from executives to senior and lead engineers to program managers.

Although Virgin Orbit is making efforts to seal a new deal and avoid bankruptcy, there’s a situation of panic currently in the company, said the sources. One source also told CNBC that one possible buyer is showing hesitation at the proposed sale price of nearly $200 million.

Virgin Orbit Preparing for Bankruptcy

One of the sources also said that Virgin Orbit has been preparing for bankruptcy simultaneously as it seeks to break a deal. The company has hired two firms – Alvarez & Marsal and Ducera Partners – to design a restructuring plan in the case of insolvency.

As said, Virgin Orobit has been conducting some bold experiments recently. They developed a system for sending satellites into space by using a modified 747 jet, that drops a rocket midflight place under the aircraft’s wing. However, its last mission suffered a midflight failure as its rocket failed to reach orbit.

Virgin Orbit spun out back in 2017 from Virgin Galactic with Richard Branson being its single-largest owner with 75% ownership. Emirati sovereign wealth fund Mubadala has the second-largest stake of 18% in Virgin Orbit.