Virgin Orbit Faces Bankruptcy and Employee Exodus

Virgin Orbit, the US-based satellite launch provider, is reportedly facing bankruptcy as it struggles to secure new funding sources. The company paused its operations and furloughed most of its employees last week. It is said to be scrambling to find a funding lifeline, with a potential buyout proposal of nearly $200 million on the table. Virgin Orbit CEO Dan Hart and other senior executives have been holding daily talks with interested parties to secure funding. However, the company has yet to announce any updates on the situation as it continues searching for a lifeline.

Virgin Orbit’s Struggling Finances

Virgin Orbit’s shares are listed on the Nasdaq exchange in New York. However, since its operations were paused, the company’s shares have continued to fall, reportedly closing at $0.52 a share on Monday. Furthermore, following the failure of its inaugural British mission in Cornwall in January, sources close to the current situation have reportedly described a sense of panic amid the company’s ongoing struggles.

Employees Searching for New Jobs

Virgin Orbit’s dire financial situation has reportedly caused around 750 employees to hit the job market. According to a CNBC analysis, this talent pool includes executives, senior and lead engineers, and program managers, all of whom are actively searching for new jobs. The company’s decision to work with two restructuring firms, Alvarez & Marsal (A&M) and Ducera Partners, further showcases the dire nature of its finances. A&M has previous experience working with the Virgin Group during the COVID-19 pandemic when it developed plans for the administration of Virgin Atlantic Airways.

Virgin Orbit’s Restructuring Plans

Should Virgin Orbit be unable to secure new funding, it has been working with two restructuring firms, Alvarez & Marsal (A&M) and Ducera Partners, to develop restructuring plans, according to Sky News. The workaround for those plans is also reportedly being held outside the US. A&M’s previous experience working with the Virgin Group could come in handy as it works to restructure Virgin Orbit.

Potential Buyout

According to CNBC, a possible buyer is willing to put nearly $200 million down as a proposed sale price. This price is just below the company’s market value as of Friday’s close. However, the identity of the potential buyer or parties interested in funding Virgin Orbit on an ongoing basis is unclear. Notably, Boeing, which has previously invested in the company, has not been included in any current negotiations.

Virgin Orbit’s System

Virgin Orbit is known for developing a system for sending satellites into space using a modified Boeing 747 that releases rockets from under the aircraft’s wing mid-flight. Suppose the company is unable to secure new funding. In that case, it could have dire consequences for Virgin Orbit, the wider industry, and the development of new technologies.

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Sources:

• Source: Simple Flying
• Featured image by: CNBC

Mina Maher

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