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Delaware Bankruptcy Court Rejects Equity Holder's Challenge to Revoke Confirmation Order
In the bankruptcy case of Virgin Orbit, Bankruptcy No. 23-10408, 2024 WL 973644 (March 6, 2024), the U.S. Bankruptcy Court for the District of Delaware (the court) addressed a motion, pursuant to 11 U.S.C. Section 1144, filed by a former equity holder who sought to revoke the confirmation order. In particular, the equity owner asserted that the confirmation order that was previously entered by the court should be revoked based on the equity owner's claim that value was lost due to improper sale and marketing efforts by the debtors and its professionals both pre- and post-bankruptcy and, as such, they should have been "in the money" and entitled to a distribution under the confirmed plan.
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."
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