XCOR Owes $27.5 Million to Creditors, Orbital Outfitters Out of Business

Lynx engine hot fire. (Credit: XCOR)

The numbers are in on XCOR Aerospace’s bankruptcy, and as one would expect, they’re not real pretty.

The company has $1.1 million in assets and $1,424.66 in cash, according to documents filed with the Bankruptcy Court for the Eastern District of California. XCOR owes $27.46 million to creditors, with $23.6 million in unsecured debts and $3.86 million in liabilities secured by assets.

Orbital Outfitters, a company that was developing spacesuits in which XCOR had a financial interest, is listed in the documents as being “out of business.”

Space Florida is the largest secured credit at $3.6 million. The state-run agency’s has a “blanket security interest in personal property.” XCOR had made a deal to manufacture and operate its Lynx suborbital space plane from Florida.

XCOR estimates it spent $25 to $30 million developing the unfinished Lynx. An additional $15 to $20 million would be required to complete the vehicle, according to the documents.

Midland Development Corporation (MDC) has $10 million in unsecured claims. The funding was provided to XCOR to move from its base in Mojave, Calif., to the West Texas city, a process the company did not complete before it filed for bankruptcy earlier this month.

SXC N.V., located on the island of Curacao, is owed $6.3 million. XCOR had planned to fly Lynx from the Caribbean island.

Orbital Outfitters had moved out to Midland with financial aid from MDC. It’s not clear when the company went out of business.

  • Jimmy S. Overly

    Damn, the XCOR story keeps getting sadder. And only $1,424.66 in cash?

    How much of that $27.5 million do you (the Parabolic Arc peanut gallery) do you think the IP and equipment auction will cover?

  • ThomasLMatula

    Probably not enough to even pay the lawyers the creditors need to hire. Looks like Midland Texas made a very bad bet. And two more high profile failures make it that much harder for other space startups to raise funding.

  • Jimmy S. Overly

    Bummer. Sad story all around.

  • Douglas Messier

    I don’t know. I’m curious as to what Space Florida’s “blanket security interest in personal property” covers.

  • publiusr

    Very sad.
    I didn’t agree with Greason on much, but his friends deserved better.

  • Jimmy S. Overly

    Can somebody enlighten me on what SXC N.V. does/did and why XCOR would owe it $6.3 million? Based on this article, it sounds like they were just a middleman between customers and XCOR? Why would XCOR need this fixer but Blue and VG sell tickets directly to customers? (Well, I guess Blue isn’t selling tickets yet, but I don’t anticipate them selling through a middleman).

    http://curacaochronicle.com/aviation/xcor-aerospace-acquires-space-expedition-corporation-sxc-to-become-xcor-space-expeditions-an-open-global-platform-for-xcor-lynx-flights/

    (Sorry for monster length link)

  • delphinus100

    Indeed. I had higher hopes for these guys than Virgin…

  • Douglas Messier

    It was a Dutch group that invested in XCOR. It also handled customer relations.

  • Kenneth_Brown

    It’s hard to put a value on Xcor’s technologies. It will be whatever buyers are willing to fork over. They did develop a lot of very good components and sub systems that could be worth it for another company to buy up and commercialize. It probably doesn’t add up to $25 mil so some investors are going to take it on the chin.

  • File this under Woulda, Coulda, Shoulda, but…

    With the aerodynamic shape of the Lynx being fundamentally stable, why isn’t there a home built version (scale or full size) that someone is building with either propeller or jet propulsion? XCOR did the EZ-Rocket, why not do an EZ-Lynx? You could test out construction methods, subsystems and aerodynamic handling before going to a higher performance version.

    Homebuilders have been known to copy/modify some crazy planes they weren’t “supposed” to, like The Bally Bomber (http://www.theballybomber.com/index.html) or even some F-117 look-a-likes. You could test an awful lot of the design with a few dedicated homebuilders and move the ball down the road.

  • savuporo

    Worthwhile space startups, i.e. ones with credible business prospect, are getting funded left and right. There’s plenty of money to go around. $1.5B of VC money went into space startups in 2016. Things that are worth funding get funded

  • redneck

    Things that attract funding get funding. It’s not the same thing.

  • Kirk

    Does “$1.1 million in assets … and $3.86 million in liabilities secured by assets” mean that there is an additional $3.86 million in assets beyond the $1.1 million, or that the collateral was insufficient to fully cover the secured assets?

  • Mr Snarky Answer

    What customers?

  • I was involved in evaluating the Kistler assets on behalf of another company. In the rocket business, everything is so project and vehicle focused that it is rare for the value to transfer. On top of that, most big aerospace companies with $$$ are culturally predisposed to start over in order to maximize their project footprint. New space startups don’t want to spend their carefully managed $$ on “off vision” tech. In Kistler’s case I saw millions of $$$ of beautiful hardware and ip that was worth less than the metal, carbon, and paper scrap value by weight. 🙁

  • Unfortunately, XCOR has demonstrated the key New Space truth: The number one ingredient in a successful rocket company is funding and business sense.

    The number two ingredient is: Innovative, effective, results based engineering and engineering culture.

    It is really hard to build a team with both skill sets, as they often mix poorly, like oil and water.

  • Jeff2Space

    Agreed that things that attract funding get funding. There are quite a few startups out there that currently don’t pass the smell test, IMHO.

    The cyclical resurgence in “small launch capability” is a good example of this. But if you look at Falcon 1 (which was to fulfill this market), it was cancelled right after its first successful flight. Why? Couldn’t make (enough) money.

    One of the payloads intended for Falcon 1 even flew on Falcon 9. SpaceX likely lost money on that one launch, but they’ve clearly gained a huge amount of cash flow and additional investment money due to how successful Falcon 9 has been.

  • Jeff2Space

    I was sad to see Kistler go and am sad to see XCOR on the way out. They both seemed to have some good tech. But the business side of things is where these companies fail. Lack of investors with truly deep pockets is a problem for a start up.

  • Jimmy S. Overly

    Interesting anecdote. Thank you for sharing!

  • OldCodger

    As I understand it the latter.

  • OldCodger

    Does that mean the directors are going to lose their shirts?

  • Henry Vanderbilt

    I might guess XCOR owed SXC NV the $6.3 million at least in part because of SXC NV loans to XCOR. Hard to say for sure until all the details of the business arrangements come out. (If they ever do.)

  • Henry Vanderbilt

    Tourist customers. Originally SXC (Space Expeditions Curacao, IIRC, apparently not entirely the same thing as SXC NV) sold tickets, as part of a deal for a major investment in XCOR by a group that wanted to operate Lynx out of the Dutch Caribbean.

    Then at some point SXC-C was merged with XCOR? I’m not clear on the details – I was a mere stockholder at that point; the whole SXC thing came about after I’d left.

    SXC NV seems related – a holding company or some such? – but presumably did not merge and remained independent of XCOR.

    Me, I’m mildly curious as to whether the prospective tourists whose deposits were supposed to be held in escrow will see anything back.

    The whole thing seems to have become notably tangled over the years. I have profound sympathy for the bankruptcy trustee who has to sort it all out now.

  • Henry Vanderbilt

    Short answer: There are distinctly non-trivial matters of aeroelastic characteristics involved. Control characteristics too, I’d assume. Adequate propulsion is also non-trivial.

    For that matter, I’m pretty sure any attempt to recreate the precise aerodynamic shape from public info – photos, mockups, etc – would miss essential subtleties that are only available from the engineering docs.

  • Henry Vanderbilt

    I’d reverse those ingredient priorities: First-rate innovative engineering and effective fast&lean development & test culture is essential.

    Given those, you can get by with surprisingly modest amounts of funding, as long as you have decent business sense. IMHO.

  • Top Bants

    Things that will actually provide a return on investment are the things that get funded.

    XCOR didn’t have a solid plan to make money. Simple as that.

  • Top Bants

    According to the news article linked below, XCOR says it sold over 300 tickets. I take that to mean that customers actually gave them some amount of money (either full price or a deposit).

    Will the customers be getting this money back or did XCOR have a “no refunds” policy?

    http://spacenews.com/xcor-to-raise-ticket-prices-for-suborbital-flights/

  • Top Bants

    Don’t forget – it is possible to literally use cash as rocket fuel.

    But only if it’s a hybrid rocket. 🙂

  • ThomasLMatula

    Depends on the wording of the contracts, but this could be a large legal issue if they claimed they were able to provide a service they couldn’t provide. It also depends on the country that governs the contracts for the tickets and how the money was handled. Yes, it will be a problem the lawyers and bankruptcy judge will need to sort out as well.

  • Henry Vanderbilt

    I can’t speak for what sales pitches might or might not have been made at various times by various parties, but anyone who wasn’t clear that rides were contingent on successful development of the vehicle wasn’t paying attention.

    That said, tickets were sold and/or deposits taken in multiple countries under different laws. Also sold by different organizations – IIRC, XCOR had taken deposits for a number of seats before the SXC deal came along – under, I might guess, differing ticket agreements.

    It’ll be interesting to see how it all gets sorted out.

  • Jimmy S. Overly

    Interesting question. To my knowledge there’s never a been any homebuilt that’s broken the sound barrier. Didn’t SS1 hold some distinction as the first thing built with private money to break the sound barrier? Even so, it was designed by his highness Burt Rutan.

  • I don’t think a super sonic initial version would be necessary. There’s plenty of things you could learn before compressible flow becomes an issue. Heck, SS2’s problem seems to be unrecoverable spins – very “low Mach #” types of problems.

    Verifying controls, construction techniques, low to mid M aerodynamics, payload integration, ground and flight procedures, maintainability, etc. all could be verified on a medium fidelity aircraft. You could even keep it around and use it as the “trainer” version once the full Lynx is complete. Take it up to high altitude and put it in a nosedive to gain airspeed and practice the pitch-up and then cut power to practice the pitch-over and landing procedure.

    It seems like most of these space projects bight off more than they can chew. Even Elon has had to keep scaling back the size/capabilities of his hardware and increasing the timeline/price to deliver it.

    We all want these spaceplanes to work, but we haven’t even recreated the NF-104A!

  • patb2009

    I suspect without looking at the filings, there are about 1.1 Million in assets,
    plus 1.4 Million in cash.
    and a 3.86Million note that is secured by the 1.1 Million in Assets and the cash/
    asset sales.

    Sold as a fire sale, there is perhaps 2 million to be recovered.

  • patb2009

    might be worthwhile to Blue Origin and SpaceX now.

  • patb2009

    Everything…. It is typical language that all assets, were pledged against a note.