Virgin Orbit plan’s exculpation provision too broad, trustee says

By Sarah Lizee

Olympia, Wash., July 25 – Virgin Orbit Holdings, Inc.’s Chapter 11 plan drew an objection from Regions 3 and 9 U.S. trustee Andrew R. Vara, according to documents filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

Vara said the plan should not be confirmed because it includes an impermissibly broad exculpation provision that protects what could amount to hundreds of non-fiduciaries by way of a “related party” clause in the plan.

The related parties that the debtors propose to exculpate include all of their affiliates, including Virgin Investment Ltd., which is the debtors’ debtor-in-possession lender and prepetition lender.

The parties also include counsel and other professionals who represent the members of the official committee of unsecured creditors in their individual capacities, and many other persons and entities that do not qualify for exculpation, Vara said.

The confirmation hearing is scheduled for July 28.

Long Beach, Calif.-based Virgin Orbit operates space launch systems. The company filed bankruptcy on April 4 under Chapter 11 case number 23-10405.

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