Masten Space Systems, a business with a focus on the moon, filed for Chapter 11 bankruptcy protection on Thursday. As a result of layoffs and furloughs, the company currently only employs a small number of individuals.
The space company filed for bankruptcy as its debts grew, dating back to a NASA contract that Masten received two years prior. The NASA contract, which was once viewed as a significant victory for the little business, left Masten over budget and unable to raise money or pay staff.
Many of the businesses that emerged during the rise of private investment in the space industry during the past 10 years predate Masten. With facilities in the Mojave Desert, close to NASA’s Armstrong centre and Edwards Air Force Base, the corporation has a longstanding reputation in the industry as a tough place for new engineers to get their start in rocket and spacecraft technologies.
Masten has a history of showing off spectacular gear, but its bankruptcy demonstrates the fine line that must be maintained for long-term growth and success in the competitive, expensive space sector. It is challenging to find funding for risky space missions, and it is extremely harder to complete them.
Masten, which was established in 2004, frequently won modest contracts and prizes for testing and developing reusable spacecraft that could launch and land, particularly for the moon’s surface. The unofficial company motto was “Shut up and fly.”
However, the $75 million contract Masten received in 2020 to send eight scientific payloads to the Moon’s South Pole stands out as the most significant NASA contract Masten had ever earned. About 15 individuals worked for Masten at the time of the award.
Masten Mission 1, or MM1, was planned to be the name of the NASA contract. The company’s Xelene lunar lander, slated to launch in 2023, would carry scientific payloads. Masten agreed to launch MM1 with SpaceX, owned by Elon Musk. Masten immediately scaled up to build the lander, according to people familiar with the situation who spoke to CNBC but requested anonymity owing to the sensitivity of the situation.
Masten, however, found the award to be immediately problematic because it had developed the NASA application prior to the Covid epidemic. According to those with direct knowledge of the situation, the corporation needed to modify its assumptions about which technology would be created internally rather than purchased right away. Vendors were also reluctant to make commitments in the new pandemic climate.
Masten needed to add more payloads to the missions in order to meet even aggressive cost predictions for the NASA contract. The overall MM1 budget, however, ended up costing more than anticipated. According to individuals who were involved in the mission’s development, Masten predicted that it would cost between $10 million and $30 million more than originally planned.
Masten needed to add more payloads to the missions in order to meet even aggressive cost predictions for the NASA contract. The overall MM1 budget, however, ended up costing more than anticipated. According to individuals who were involved in the mission’s development, Masten predicted that it would cost between $10 million and $30 million more than originally planned.
Masten increased its workforce to roughly 120 employees and contractors last year, but additional growth was stymied by a lack of funding and increasing debt. CEO Sean Mahoney was in fact fired by the board of directors in January. People with knowledge of the matter claimed that a $1.4 million NASA payment to Covid in February merely prolonged the company’s financial stability. As part of the larger federal disaster assistance programme, NASA gave money to American companies.
The corporation then let go of 20 workers in June, 15 of them were from the MM1 team specifically, according to those persons. According to the Mojave-based blog Parabolic Arc and CNBC, Masten laid off almost all of the company’s remaining staff in July.
In a statement to CNBC, a NASA representative said that the organisation “received notification its payloads slated for delivery aboard Masten Mission One may be impacted by Masten business operations.”
“In the event Masten Space Systems is unable to complete its task order, NASA will manifest its payloads on other CLPS flights,” the agency said.
NASA has already spent $66.1 million toward the mission of Masten’s contract.
The company estimates that its assets are worth between $10 million and $50 million, and that its obligations are valued between $10 million and $50 million, according to the filing made on Thursday. The company has between 50 and 99 creditors.
The highest unsecured claim against Masten’s debt is held by SpaceX, which has a vendor debt of $4.6 million. With debts totaling at least $500,000, a number of suppliers and other space businesses, including Airbus and Astrobotic, are identified as significant debtors.
According to Masten’s application, some of the property requires immediate care due to explosive and toxic chemicals. Due to a “stalking horse asset purchase agreement,” Intuitive Machines, another business with a focus on the moon, gets first crack at Masten’s launch contract with SpaceX.
When CNBC contacted a Masten spokesperson for more information regarding the bankruptcy, they did not answer.
