Idaho residents who follow the technology sector may be aware that British billionaire Sir Richard Branson’s Virgin Orbit entered the lucrative satellite launch business in 2017. Virgin Orbit used a repurposed Boeing 747 to successfully launch 33 satellites, but the company did not attract many customers and had difficulty finding the capital it needed to maintain its operations. On April 3, Virgin Orbit executives announced that the company had filed a Chapter 11 bankruptcy petition.
Assets to be sold
Many companies use the protections provided by a Chapter 11 bankruptcy to reorganize, but that does not appear to be the plan in this case. While the company’s announcement mentions future missions and opportunities, it also states that the company and its assets will be sold. Virgin Investments Limited has agreed to provide $31.6 million in debtor-in-possession financing to allow the company to continue operating until a buyer is found.
Executive blames poor leadership
In an email sent to Virgin Orbit employees on the day of the bankruptcy announcement, the outgoing chief operating officer suggested that the company’s predicament was the result of poor leadership. The COO was one of the 675 Virgin Orbit employees who were laid off following the announcement. The email blamed the bankruptcy on senior executives who did not use financial resources properly and failed to publicize the company’s successes. The email did not mention Virgin Orbit’s problems raising capital or its lack or orders.
Good money after bad
Companies that promise to disrupt highly competitive markets with revolutionary technology that has not yet been perfected often run out of cash. These companies are sometimes backed by visionary billionaires that attract a great deal of media attention, but they did not become billionaires by throwing good money after bad. When groundbreaking ideas do not produce reliable revenue and research and development costs remain high, bankruptcy becomes almost inevitable.