Virgin Orbit has begun drawing up detailed contingency plans for its insolvency days after halting its operations and furloughing its workforce.
Sky News has learnt that the commercial space satellite venture founded by Sir Richard Branson‘s Virgin Group is working with Alvarez & Marsal (A&M) and Ducera, two restructuring firms, on fallback plans in the event that it cannot secure new funding.
The decision to line up the advisers underlines the parlous nature of Virgin Orbit’s finances, even as it continues talks with a small number of prospective investors about providing sufficient funding to restart its operations.
Virgin Orbit is 75%-owned by Sir Richard’s holding company, with its shares listed on the Nasdaq exchange in New York.
Its value has further plummeted following the failure of its inaugural British mission in Cornwall in January.
After going public in 2021 through a merger with a special purpose acquisition company in a $3.7bn (£?bn) deal, its listed shares are now valued at just $217m (£177m).
Sources said the insolvency planning work involving A&M and Ducera was being run out of the US.
A&M also worked on plans for the administration of Virgin Atlantic Airways as it raced to recapitalise itself during the COVID-19 pandemic.
The identities of the parties interested in funding Virgin Orbit on an ongoing basis were unclear on Sunday evening, although one source said that Boeing, which has invested in the company previously, was not in talks with it.
Virgin Orbit is understood to be aiming to secure additional capital during the course of this week, they added.
Dan Hart, Virgin Orbit’s chief executive, has been hoping to launch a further mission in the coming weeks, but that prospect is remote unless the company can secure new capital.
A Virgin Orbit spokesperson said last week: “Virgin Orbit is initiating a company-wide operational pause, effective March 16, 2023, and anticipates providing an update on go-forward operations in the coming weeks.
“On the ops side, our investigation is nearly complete and our next production rocket with the needed modification incorporated is in the final stages of integration and test.”
Sources close to Virgin Group said that Sir Richard’s privately held empire had supported Virgin Orbit to the tune of more than $1bn (£818bn), including $60m (£49m) since November 2022.
One insider said the funding provided to the company had not been sufficient to counter the strong headwinds and liquidity crisis facing it.
Virgin Orbit was confident it was taking decisive action to protect employees and the company’s assets while it continued to evaluate alternative options, they added.
Virgin Orbit was established in 2017, with a focus on operating launch missions for small commercial satellites from an adapted Virgin Atlantic Boeing 747 plane.
The company has made four successful missions, launching 33 satellites to their desired orbit, according to a spokesperson.
Taking Virgin Orbit public at a multi-billion dollar valuation was seen as a vindication of Sir Richard’s efforts to construct a lucrative business empire in the space technology sector.
In 2019, he merged Virgin Galactic, his space tourism operation, with Social Capital Hedosophia, another SPAC, in a deal which heralded the ongoing deluge of so-called ‘blank cheque’ companies.
Virgin Orbit was spun out of Virgin Galactic and has been run for years by Mr Hart, a former Boeing executive.
Chancellor Jeremy Hunt considering further public spending cut to boost tax giveaway in budget
Jeremy Hunt is considering a last minute further cut to public spending to boost the tax giveaway in Wednesday’s budget.
The Politics At Jack And Sam’s podcast, out now, sets out how Number 10 and 11 have spent recent days finding as many different ways of raising future revenue as possible to increase the size of Wednesday’s tax cuts.
National insurance could be cut by 2p again in the budget if the chancellor succeeds in finding the right mix of revenue-raising measures and spending cuts.
Currently, spending is due to rise 1% above inflation after next year. However, if this was cut to 0.75% above inflation, that would raise £5-6bn.
The chancellor would hope to resist questions about where he would cut, saying he is doing an efficiency drive and decisions would be outlined at a future spending review post election.
The decision on whether to cut future spending was live in the Treasury as recently as Friday, and this morning the chancellor was arguing about the importance of finding efficiencies.
This is likely to boost Labour’s charge that the government is “maxing out the credit card” to keep its own supporters on side.
However, most Tories in government believe this is a necessary trade-off to allow the party to go into the next election presenting themselves as the low-tax party.
Some senior Tories disagree, however, worrying that the public is more worried about the state of public services than tax cuts.
The budget is likely to have cuts or the abolition of non-dom status, which could raise £2-3bn, plus other small loopholes being closed, generating a few hundred million in revenue.
The Politics At Jack And Sam’s Podcast also reveals how delaying Contaminated Blood compensation payouts has helped deliver tax cuts.
In January, the Treasury was worried those payments might reduce the amount the chancellor could spend before he reached the borrowing limits from his fiscal rules.
However, the inquiry will not report until later and the government is resisting calls for interim payouts.
Any tax cuts will need to be ‘undone’ after election, economist claims
Any tax cuts made during this budget will “one way or another be undone after the election”, according to one economist.
Speaking to Sky News, Paul Johnson, the director of the Institute for Fiscal Studies, explained that – if it were not an election year – it is unlikely that Chancellor Jeremy Hunt would be looking to trim the tax burden.
Speaking to Sunday Morning with Trevor Phillips, Mr Hunt said his budget would be “prudent and responsible” – but added that he wanted to “make some progress” on the “journey” started by the two pence cut to National Insurance announced in the autumn statement six months ago.
The chancellor is facing pressure to cut taxes to try and shift the polls in favour of his own party, which is languishing well behind Labour.
Mr Johnson said: “I think this is going to be a political decision in an election year. If this weren’t an election year, I don’t think we’d be talking about tax cuts at all.”
He added: “If we weren’t looking at an election, I think he would be saying, let’s steady as she goes, let’s see where we are in a year or two.
“But given it is an election, I suspect we will get some tax cuts.
“My guess, though, is that those will, one way or another, be undone after the election.
“The state of public finances, the state of public services, the shortage of money for everything from the health service to local government to social care indicates to me, we’re going to need more money over the next five years rather than less.”
Changes to income tax and National Insurance have been mooted as potential options, as well the government taking Labour’s policy of scrapping the non-dom tax status.
But with the budget itself not due until Wednesday lunchtime, Sky News understands decisions are still being made in Downing Street about what to include.
The tricky financial picture means there has been limited space to make pre-budget announcements.
The tax burden is reaching record levels, with it expected to rise to its highest point since the Second World War before the end of this decade as the country looks to pay back heavy borrowing used for support during COVID-19 and the energy spike in the aftermath of Russia’s invasion of Ukraine.
Mr Hunt has already announced plans for an £800m package of technology reforms which government hopes will free up public sector workers.
Mr Hunt claims that “we shouldn’t fall into the trap of thinking more spending buys us better public services” – and that the £800m investment will yield £1.8bn in benefits by 2029.
Torsten Bell, the head of the Resolution Foundation, worked in the Treasury as a civil servant before going to work for chancellor Alistair Darling in the financial crisis.
He explained to Sky News why Mr Hunt is having difficulty “rolling the pitch” – preparing the ground for the announcements in the budget.
Mr Bell said: “The reason why the chancellor is finding things quite difficult is two reasons; One is the difficult economic circumstance.
“We’re obviously coming out of a high inflation period, but we’re not seeing a lot of economic growth.
“And then on top of that, we’re in a world where they’re talking about tax cuts, but everybody around the country, everybody watching this knows that, the reality is this is an era of taxes going up.
“So it’s a difficult situation.”
Mr Hunt said he wants to cut taxes as it helps faster growth as seen in North America and Asia.
“But it would be deeply unconservative to cut taxes in a way that increased borrowing that wasn’t fully funded,” the chancellor said.
“If I think of the great tax-cutting budgets of the past – Nigel Lawson’s budget in 1988.
“The reason that was so significant is because those tax cuts were permanent and people need to know that these are tax cuts you can really afford.
“So it will be responsible and everything I do will be affordable.”
Banks placed on alert over ‘rogue’ Companies House filings
Britain’s biggest banks have been placed on alert over hundreds of ‘rogue’ filings which appear to have been lodged at Companies House, the UK’s central corporate register.
Sky News has obtained a note issued by UK Finance, the banking trade association, which warned its members that approximately 800 forms relating to the discharging of financial liabilities were submitted at Companies House late last month.
In the notice to banks – marked as “Urgent” when it was circulated last week – UK Finance said it had alerted both Companies House and the Department for Business and Trade to the issue.
Industry executives pointed to the possibility of an attempted fraud or hacking of the Companies House register, although the circumstances remained unclear on Sunday.
UK Finance said in its memo that a number of members and law firms had “flagged an issue regarding the apparently erroneous satisfaction of security (registered charges) on Companies House relating to a number of live business clients”.
In a further update issued on Friday, it said it had been informed that roughly 800 rogue filings related to 190 companies had been submitted, adding: “Companies House have emphasised that an incorrect entry in the register – saying a charge has been satisfied – does not invalidate or cancel that charge.
“It remains valid and enforceable.
“However, there will likely be other consequences for lenders that will need to be resolved.”
Companies House, which is owned by the government, is responsible for incorporating and limiting millions of limited companies.
One source described the situation as “deeply alarming” and said it was disappointing that Companies House had also outlined plans to increase its fees in May “when it was susceptible to rogue corporate filings in this way”.
Responding to an enquiry from Sky News, a Companies House spokesperson said: “We are aware of this matter and we are looking into it.”
UK Finance declined to comment further.
Sports1 year ago
‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
Sports12 months ago
MLB Rank 2023: Ranking baseball’s top 100 players
Environment10 months ago
Japan and South Korea have a lot at stake in a free and open South China Sea
Sports2 years ago
Team Europe easily wins 4th straight Laver Cup
Environment1 year ago
Game-changing Lectric XPedition launched as affordable electric cargo bike
Sports4 months ago
Game 1 of WS least-watched in recorded history
Technology3 years ago
Game consoles were once banned in China. Now Chinese developers want a slice of the $49 billion pie
Politics2 years ago
Have the last few wobbly weeks seen a turning point for Johnson as PM?