Virgin Orbit’s Chapter 11 plan confirmed by bankruptcy court

By Sarah Lizee

Olympia, Wash., July 28 – Virgin Orbit Holdings, Inc. received confirmation of its Chapter 11 plan on Friday from the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the plan was recently amended to incorporate a settlement reached with the official committee of unsecured creditors.

Through the settlement, since the class of general unsecured creditors voted to accept the plan, holders will receive a pro rata share of the following:

• $1.1 million in cash, up from $400,000 originally;

• The difference between $2.25 million, up from $1.5 million originally, and the allowed professional fee claims of the committee professionals;

• The following portions of the total amount of net proceeds of any remaining asset sale: 100% of amounts from zero to and including $825,000, 50% of amounts greater than $825,000 to and including $5 million, 25% of amounts greater than $5 million to and including $7.5 million and 0% of amounts greater than $7.5 million;

• The following portions of the remaining portions of the remaining net tax refunds: 50% of amounts from zero to and including $2.5 million, 75% of amounts greater than $2.5 million to and including $5 million, 80% of amounts greater than $5 million; and

• The establishment of a litigation trust to be funded from distribution proceeds to pursue causes of action of the estates against persons or entities that provided audit services to the debtors and persons or entities based on Chapter 5 of the bankruptcy code who received transfers from the debtors in an amount greater than $100,000 during the 90-day period prior to the petition date.

Other plan terms

Virgin Orbit conducted a sale process for its assets and has sold them to various purchasers, apart from some assets.

Distributions under the plan will be funded with cash on hand, monetization of the debtors’ remaining assets, and, if needed, contributions from Virgin Investments Ltd.

To the extent of any shortfall and if all conditions precedent to the effective date of the plan are satisfied, the parent company will provide the debtors or the plan administrator enough cash to fund: the administrative claims (other than debtor-in-possession facility claims), priority tax claims, other priority claims, and other secured claims; the professional fee escrow account; the wind-down amount; and the general unsecured pool.

Under the plan, other priority claims will be paid in full in cash.

Holders of other secured claims will receive either payment in full in cash, the collateral securing their claims, or other treatment leaving the claims unimpaired.

The prepetition secured note claims will be allowed principal amount of $28.4 million plus accrued interest and other amounts due. On the effective date, noteholders will receive all distributable proceeds, after the payment in full of debtor-in-possession claims, up to the allowed amount of the prepetition secured note claims, as well as litigation trust interests.

To the extent the distributable proceeds are insufficient to satisfy the prepetition secured notes claims in full, the prepetition secured noteholders agree not to receive any distribution on account of any resulting deficiency claims and will not receive a pro rata share of the GUC recovery pool on account of the deficiency claims.

If confirmation occurs, to the extent the distributable proceeds and the litigation trust interest are insufficient to satisfy the prepetition secured notes claims in full, the prepetition secured noteholder agrees not to receive any distribution on account of any resulting deficiency claims and shall not receive a pro rata share of the general unsecure creditor recovery on account of the deficiency claims.

The right for prepetition secured noteholders to receive distributable proceeds on account of their claims and the right to credit bid such claims up to the unpaid amount of prepetition notes claims in connection with any sale of the debtors’ assets, other than a remaining asset sale, will be preserved until all assets in the debtors’ estates have been liquidated.

Each holder of a convenience claim will receive, if the total amount of all allowed convenience claims does not exceed $500,000, cash in an amount equal to 50% of their claim. If the total amount of all allowed convenience claims exceeds $500,000, each holder will receive its pro rata share of $250,000.

Intercompany claims and interests will be adjusted, reinstated or discharged.

Subordinated claims and equity interests will be canceled.

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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