Delaware Bankruptcy Court Rejects Equity Holder's Challenge to Revoke Confirmation Order

In this particular case, the debtors, Virgin Orbit Holdings, Inc., Virgin Orbit National Systems, LLC, Vieco USA, Inc., Virgin Orbit, LLC, and JACM Holdings, Inc. (collectively, the debtors), provided satellite launch services to both domestic and international private and public customers. Prior to filing for bankruptcy, the debtors had tried to market the company for sale but were unsuccessful. Facing a significant liquidity crisis, the debtors filed for Chapter 11 bankruptcy relief in early 2023 with the idea of trying to maximize value for all stakeholders by having a 363 sale of substantially all of their assets. As part of the bankruptcy case, the debtors obtained an order approving certain bidding procedures, which, among other things, included an auction date and notice of the sale hearing. The bid procedures order was entered on an uncontested basis and, as part of this order, the court "determined that the bidding procedures were in the best interests of the estates, fair, reasonable, appropriate, and reasonably designed to maximize value." In addition, the court also approved the form and manner of the sale notice as being appropriate and "reasonably calculated to provide proper notice of the auction, sale hearing and the bidding procedure."

Following approval of the bidding procedures, a stalking horse purchaser was selected for some but not all of the debtors' assets. In making this designation, the debtors' investment banker explained that it had contacted over 200 potential strategic and financial bidders for the assets, solicited offers for both a going-concern sale for piecemeal asset sales, established a virtual data room, and to the extent appropriate, gave access to potential bidders to "the debtors' management team, operational personnel and facilities." Although multiple parties proposed indications of interest, as noted by the court, the "debtors and their advisors determined that selection of the stalking horse's bid to establish a floor price for the subject assets in anticipation of the future auction would maximize recoveries for all stakeholders and was in the best interest of the debtors." Following the selection of the stalking horse, the debtor, its investment banker, and the Official Committee of Unsecured Creditors (the committee) ultimately decided that it would make sense for the debtors' assets to be sold in five distinct groups. These groups of assets were auctioned, and while there were four non-insider winning bidders for four of the asset groups, the fifth asset group was not sold.