Moon-focused company Masten Space Systems filed for Chapter 11 bankruptcy protection on Thursday, with the venture already being made public by some in the wake of layoffs and layoffs.
The space company claims as its debts grow, stemming from a contract NASA awarded to Masten two years ago. Once seen as a big win for small business, the deal with NASA left Masten over budget, unable to raise funds or pay employees.
Masten predates many established companies the explosion of private investment in the space sector over the past decade. The company has long been known in the industry as a one-stop shop for young engineers to research rocket and spacecraft technologies at its facilities in the Mojave Desert, near Armstrong’s Armstrong center. NASA and Edwards Air Force Base.
While Masten has an impressive history of hardware demonstrations, the company’s bankruptcy represents the delicate balancing act required for long-term growth and success in the capital-intensive space industry. harsh. Raising money for high-risk space projects has been hard, and achieving them is even more so.
Founded in 2004, Masten regularly wins small contracts and awards for testing and developing reusable spacecraft that can take off and land, especially for the surface of moon. The company had an unofficial motto: “Shut up and fly.”
Masten has won several NASA contracts – but most notably a $75 million prize in 2020 to deliver eight science payloads on a mission to the Moon’s South Pole. At the time of the award, Masten had about 15 people on the payroll.
The contract with NASA will be Masten Mission 1, or MM1. It will fly the science payload aboard the company’s Xelene lunar lander, scheduled for 2023. Masten has contracted Elon Musk’s SpaceX to launch the MM1. People familiar with the matter, who spoke on condition of anonymity due to the sensitive nature of the matter, told CNBC that Masten has begun rapidly scaling up to build the lander.
But the award was immediately problematic for Masten, as it wrote the proposal for NASA before the Covid pandemic hit. According to people familiar with the matter, the company needs to immediately adjust its assumptions about what technology will be developed in the country, rather than buying and suppliers being unwilling to make commitments due to uncertainty about what to expect. new pandemic environment.
To avoid going over budget, Masten needed to beef up the contract with NASA with additional payloads for the missions to achieve even robust cost estimates. But the total MM1 budget ultimately still exceeded the expected cost. These people said that as development continues, Masten predicts the mission will exceed budget by $10 million to $30 million.
In early 2021, Masten’s board and senior management began an effort to raise $60 million in external capital. The company has previously raised little other than small sums from angel investors. However, the effort never found a major investor, and Masten was still in the midst of a knife attack. The company operates on a viable basis for most of its life, living on contract and reinvesting any profits back into the business. The new model added a new level of pressure.
Last year, Masten expanded to about 120 employees and contractors, but a lack of capital and mounting debt hampered progress. The board effectively removed CEO Sean Mahoney in January. People familiar with the situation said NASA’s $1.4 million Covid-related payment in February only helped the company keep solvents a little longer. NASA distributed the funds as part of a broader federal disaster relief program for U.S. businesses.
The company then laid off 20 people in June, these people said, especially 15 people from the MM1 team. In July, Masten recruited nearly all of the remaining employees at the company, as reported by the Mojave-based blog Parabolic arc and confirmed by CNBC.
A NASA spokesperson wrote in a statement to CNBC that the agency “has received notice of payloads scheduled for delivery on Masten Mission One that may be impacted by Masten’s business. “
“In the event that the Masten Space System is unable to fulfill its mission, NASA will declare its payload on other CLPS flights,” the agency said.
To date, NASA has paid out $66.1 million in contracts for Masten’s mission.
The company has between 50 and 99 creditors, according to Thursday’s filing, and estimates its assets to be worth between $10 million and $50 million, with liabilities between $10 million and $50 million.
SpaceX has the largest unsecured claim on Masten’s debt, with $4.6 million unpaid as a supplier. A number of suppliers and other space companies are listed as major creditors – such as Airbus and Astrobotic – with debts of $500,000 or more each.
Masten’s records indicate that, among its assets, immediate attention should be given to explosive and dangerous chemicals. Intuitive Machines, another moon-focused company, first reviewed Masten’s launch contract with SpaceX, due to its “agreement to purchase stalking horse assets”.
A representative for Masten did not respond to CNBC’s request for further comment on the bankruptcy.
