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Virgin Orbit wants speedy exit from Chapter 11

April 13, 2023

Virgin Orbit says it wants to exit its Chapter 11 bankruptcy protection by the end of May. The rocket-launching company moved into its ‘Debtor in Possession’ mode on April 4th with fresh cash (of $31.6 million) coming from Sir Richard Branson’s Virgin Investments company.

Virgin Orbit, in a 78-page motion to its bankruptcy court, supplied a potential schedule of activity which would lead up to an auction from prospective bidders on May 18th with a Hearing planned for May 1st and subject to the Court’s permission the sale to its successful bidder closing on or prior to June 2nd.

Virgin Orbit says that the sale will be “for the benefit of all stakeholders” which might be questioned by smaller shareholders.

Other documents presented to the Court explain that the business has been operating under extreme financial pressures for some time. It expected (it says) a potential injection of some $382 million from its Special Purpose Acquisition Company (SPAC) reverse take-over at the end of 2021 but actually received $67.8 million.

“Since the de-SPAC, the Company has pursued a broad range of strategic transactions designed to address its continuing liquidity needs,” stated Dan Hart, CEO/Virgin Orbit, said in an affidavit filed as part of the Chapter 11 proceedings. Those moves included working with investment bankers Goldman Sachs in early 2022, shortly after the completion of the SPAC merger, to either raise capital or pursue a sale of the company.

Virgin Orbit’s statement to the Court said: “The Debtors’ proposed investment banker, Ducera Partners LLC has already begun the post-petition marketing process in connection with the filing of these Chapter 11 Cases, contacting all parties from the prepetition process as well as additional potential purchasers, including those who may be interested in only a subset of the Assets. Pursuant to the Bidding Procedures, the Debtors intend to market the Assets to potential buyers and facilitate access to diligence materials.”

The statement added: “If at least two Qualified Bids are received by the Bid Deadline with regard to any particular Assets, the Debtors will conduct the Auction with respect to such Assets and shall determine, after consultation with the Consultation Parties, which Qualified Bid is the highest or otherwise best Qualified Bid for purposes of constituting the opening bid at the Auction for the relevant Assets (the “Starting Bid(s)”). In the event a Stalking Horse Bidder is selected, the Starting Bid shall include the amount provided for in the Stalking Horse Bid plus the amount of any Bid Protections. The Starting Bid(s) will be communicated and provided to the Qualified Bidders prior to the commencement of the Auction.”

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