Top exec at Richard Branson’s Virgin Orbit blames CEO and board for bankruptcy sale

In a letter sent to staff and obtained in full by CNBC, senior executive Tony Gingiss appeared to lay the blame for its collapse firmly at the feet of his chief executive, Dan Hart, and company directors for initiating the selloff of Virgin Orbit’s assets rather than finding a better solution.

“I was not able to convince our leader and board to take a different path to give us more time to figure things out,” the COO wrote to the company’s remaining employees. “We ended up where we are despite my best efforts to affect our path forward.”

The company could not immediately be reached by Fortune for comment.

The 2017 startup founded by British billionaire Richard Branson opted on Tuesday to liquidate itself as part of a Chapter 11 filing, rather than reorganize under protection from creditors like many other corporates.

The U.S. bankruptcy code was specifically written so that companies with promising business plans and strong brands can survive by shedding liabilities, often through a debt-for-equity swap.

General Motors, for example, famously went through a 40-day “pre-packaged” process following the global financial crisis, emerging a few months later with a fortress balance sheet. 

Whether Virgin Orbit could have survived will now never be known. But it did take an approach unique from Elon Musk’s rival SpaceX that sought to address a bottleneck in launching satellites from the ground.

Under the motto “any time, any place, any orbit,” it used a 14-year-old jumbo jet acquired from Branson’s commercial carrier Virgin Atlantic as an airborne launch platform, firing rockets slung under her wing to deliver small satellites into orbit.

This would reduce the reliance on spaceports often situated in remote locations as close to the equator as possible, opening up the possibility for economically viable launches in northern countries like the UK.

Courtesy of Virgin Orbit

Gingiss said Virgin Orbit’s staff had proven the service could both work and find a commercial market—in his mind its collapse was largely the fault of mismanagement.

“You simply did not have the leadership or opportunity to demonstrate to the world what you can fully do and how this product could be an enduring force in the market,” the company’s chief of operations wrote. 

Tech sector hit hard by Fed’s rate hikes

Musk highlighted the value of space-based communications early last year when his Starlink service enabled internet and wireless communications across Ukraine following Russia’s military invasion. 

In September, Apple then unveiled its new iPhone 14 complete with a new industry feature called Emergency SOS via satellite, which can alert rescue services of your location even when there is no cellular network available.

Yet inflation rates at 40-year highs hit risky tech startups particularly hard after the Federal Reserve was finally forced to take action and hike rates. 

The end of a decade-long era of cheap borrowing and virtual money printing rippled through the U.S. economy: venture capital firms struggled to raise financing and bank customers withdrew non-interest-bearing deposits to seek higher yields in safe money market funds.

As a result, the space sector only managed to raise $20 billion in investments last year, a 58% plunge from the record $47 billion in 2021, said seed-stage VC firm Space Capital in January.

According to a term sheet obtained by Reuters, Virgin Orbit was close to raising $200 million in fresh funding last month, but the plan fell through.

Gingiss wished staff “god-speed” for the future, urging them to “go boldly” into their next adventure, even if those were words other senior leaders at the company should have said first.

“I want to say something to you, that you have not heard from the person who should be saying it, so I will,” VIrgin Orbit’s COO wrote. “I’m sorry and I apologize.”