Virgin Orbit Sold Assets to Rocket Lab, Launcher, and Stratolaunch in Bankruptcy Auction

Virgin Orbit, a company launched by the Virgin Group, has recently filed a Chapter 11 bankruptcy claim in a US court after failing to gather the much-needed investments to continue operations. This article is updated as the Virgin Orbit bankruptcy process unfolds.

3, 2, 1… Sold! Virgin Orbit sells its assets

Rocket Lab, Launcher, and Stratolaunch have won bids to purchase assets from Virgin Orbit, according to new bankruptcy filings on Tuesday. The auction took place on 22nd May, and the sale hearing is set on Wednesday, 24th May, in the U.S. Bankruptcy Court for the District of Delaware.

Rocket Lab has won the auction for Virgin Orbit’s factory in Long Beach, California, which includes the machinery, equipment, and lease. The smallsat launcher bid $16.1 million for the Conant Street factory. 

Launcher Inc., which develops rockets and orbital transfer vehicles, was the victorious bidder for the $2.7 million facility in Mojave, California, which included the lease, machinery, equipment, and inventory. Vast, a commercial space station firm, owns the launcher. 

Stratolaunch, a company that creates hypersonic vehicles, won the bid for Cosmic Girl, a modified Boeing 747 that was utilized in Virgin Orbit’s air-launch procedure. It is a stalking horse bid of $17 million. Stratolaunch is working on hypersonic vehicle air-launch technologies.

16th May: Virgin Orbit receives a $17 Million bid

A “stalking horse” $17 million bid – which essentially establishes a floor for the bidding – was recently made by aerospace venture Stratolaunch. The bid was for the Cosmic Girl Boeing 747, everything related to her operation, and rights to the company’s branding. In one specification, the intellectual property related to LauncherOne and it’s connection to the 747 are not included in the deal.

Stratolaunch, which is owned by Cerberus Capital management, owns the world’s largest airplane, the former Scaled Composites Stratolaunch aircraft. It’s now called the ‘ROC’, and is also capable of horizontal launch of rockets.

The filings show that the negotiations were hard fought, with many changes to the actual property received. The agreement stipulates that the assets are purchased for cash, with a $1.7 million deposit to be made immediately in escrow if the purchase deal goes through.

17th May: The UK Government Will Not Be Bailing-Out Virgin Orbit

The UK government have recently expressed in Parliament that they will not be buying Virgin Orbit although close interest was placed in the company. The British government had bailed-out the failing company OneWeb three years ago for what were called strategic capability reasons. UK minister for science, innovation and technology, George Freeman, told a parliamentary committee that: “We’re not sitting here thinking of making a major acquisition, and acquiring and developing a UK sovereign launch capability.”

Here’s what Went Wrong for Virgin Orbit

Virgin Orbit acted as a satellite launch company and they were the team behind the creation of the LauncherOne rocket, a two-stage launch vehicle that had the capacity of delivering 300 kg of payload to Earth’s lower orbit. The rocket made four successful trips out of six – slightly better than SpaceX with the Falcon 9 – but couldn’t convince investors that all was well.

Branson is now working to sell the company to a new owner after filing for Chapter 11 bankruptcy in a Delaware court. Virgin Orbit is now moving forward on a shoestring after an order was granted for debtor-in-possession to keep in business while Chapter 11 is in process. This means Virgin Orbit will be able to run on a reduced capacity and have access to $74.1 million in loans.

12 May: Delaying the buyer deadline

Virgin Orbit has delayed the deadline for potential buyers to submit their bid for ownership of the company. The move was reported by Reuters as a way for Virgin Orbit to provide prospective new owners more time to finalise any formal bids. The source who detailed the delay told Reuters: “[its] ​​about ironing out some details and giving more time to get deals done”.  

The sale of the company is still planned to proceed as financial backing is no longer possible, with the chapter 11 filing being the nail in the coffin for the doomed company. Once valued at $3 billion, Richard Bransons’ company is about to sell its assets once a viable bidder comes forward. Therefore, the delay in bidding may lead to further interest. 

Why was the Start Me Up mission a failure?

The inaugural launch of the LauncherOne rocket was deemed unsuccessful when it failed to reach Earth orbit. Four successful commercial missions later, the fifth paying-customer flight ended with a whimper and not with a bang. An inquiry determined that a dislodged fuel filter in the upper stage of the rocket caused its premature shut down.

In a timeline of events: the rocket successfully launched carrying a payload of nine satellites from several commercial partners, and its main engine ignited. It was all going well after departing from the Cosmic Girl Boeing 747. However, when the second stage ignited, the anomaly occurred.

What Happens Now?

After filing for Chapter 11, there has been a critical timeline set, which highlights key dates for the sale of the company. Potential bidders who are hopeful to take on the company’s assets have until 4th May to submit their non-binding indications of interest, and the formal – more binding – bids are expected to be submitted by 15th May. If Branson can obtain interest from numerous parties, an auction will take place on 18th May. Finally, if interest should be apparent, and there’s a keen sense that the company will be sold, a hearing will take place on 24th May 24 in bankruptcy court.

Statements from Virgin Orbit

There has been significant noise when it comes to Virgin Orbit’s sale; numerous members of the Virgin Orbit team have expressed their disappointment and that they hope the agency can continue under a new owner.

Dan Hart, CEO of Virgin Orbit said in a statement: “The team at Virgin Orbit has developed and brought into operation a new and innovative method of launching satellites into orbit, introducing new technology and managing great challenges and great risks along the way as we proved the system and performed several successful space flights – including successfully launching 33 satellites into their precise orbit. While we have taken great efforts to address our financial position and secure additional financing, we ultimately must do what is best for the business.

Mr Hart continued to say that: “we believe that the cutting-edge launch technology that this team has created will have wide appeal to buyers as we continue in the process to sell the Company. At this stage, we believe that the Chapter 11 process represents the best path forward to identify and finalise an efficient and value-maximising sale… We remain committed to working with our investors and creditors throughout this process to achieve an optimal outcome for everyone.”