XCOR Aerospace Files for Chapter 7 Bankruptcy
Rocket engine manufacturer XCOR Aerospace, Inc. has filed for Chapter 7 bankruptcy as it exits the aerospace industry for good. The Mojave, California-based company is wrapping up all operations and heading for liquidation. XCOR Aerospace’s bankruptcy underscores the company’s ongoing financial troubles, which were exacerbated after the company failed to attract potential investors.
Founded in 1999, XCOR Aerospace has been working on building reusable rocket engines for nearly two decades. However, a lack of strategic discipline in its C-suite has led to its downfall.
In an e-mail to investors, XCOR chief Michael Blum informed of the company’s Chapter 7 bankruptcy saying, “XCOR has failed.” He added that XCOR’s inability to pay off one of its senior creditors forced the company to file for bankruptcy.
XCOR has its assets listed between $1.0 million and $10.0 million, while its liabilities are listed between $10.0 million and $50.0 million.
Blum has long been waiting for a potential merger or acquisition interest from a bigger space company which could take XCOR under its wing and save it from bankruptcy. However, no serious parties came forward in time.
XCOR Aerospace Bankruptcy Owed to Management Failure
XCOR Aerospace’s bankruptcy was highly speculated after the company announced earlier this year that it was laying off all of its employees. Last year, the company slashed its workforce to half, from 50 to just 25 employees. This year, the remaining 25 employees were also laid off, as the company ran out of money to pay its staff.
The mass XCOR layoffs followed as the aerospace company lost a contract with the United Launch Alliance, the joint venture of aerospace giants Boeing Co (NYSE:BA) and Lockheed Martin Corporation (NYSE:LMT).
The contract would have allowed XCOR to secure funding for its famed “Lynx” project, an initiative under which XCOR planned to build a two-seat spacecraft for space tourism. XCOR could use the funds to build a prototype of the spacecraft, which may have helped it secure further funding from independent investors. The much-hyped project, however, went up in smoke after the contract fell through.
The failure to secure the contract is partly blamed on its management. Many senior executives recently abandoned the company to pursue opportunities elsewhere. Finally, the dreaded XCOR Aerospace bankruptcy resulted, as the company ran out of good brains, money, and time.
Despite his company’s failure, the company chief remains hopeful about the future of space tourism. He argued that growing competition in the aerospace industry has led to efficiencies and cost reductions in the aerospace industry, saying that if this trend continues, “low cost access to space for humans will arrive. I am certain of this.”
“XCOR Aerospace files for bankruptcy,” SpaceNews, November 09, 2017.
“XCOR running out of time to find investor,” SpaceNews, October 20, 2017.