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Virgin Galactic Holdings, Inc. Announces Notice Of Settlement Of Derivative Actions
Virgin Galactic Holdings, Inc. had announced that on May 19, 2026, the U.S. District Court for the Eastern District of New York (the “District Court”) issued an order granting preliminary approval of its proposed settlement with plaintiffs, executed on April 23, 2026, which would resolve all claims pending in the shareholder derivative actions captioned In re Virgin Galactic Holdings, Inc. Derivative Litigation, Case No. 1:22-cv-00933 (E.D.N.Y.) and St. Jean v. Branson et al., Case No. 1:22-cv-7551 (E.D.N.Y.). The proposed settlement will result in, among other settlement considerations, the monetary payment of $2.75 million by the Company’s insurers to the Company, half of which the Company will retain. Once the District Court issues final approval of the settlement, all claims in these actions and in any currently pending actions that are related to or based upon any of the allegations in these actions are expected to be dismissed or declared moot. Virgin Galactic’s current and former officer and directors, who are defendants in these actions, have denied and continue to deny each and all of the claims and allegations of wrongdoing asserted in these actions. As required by the District Court’s order, Virgin Galactic issued the Notice of Pendency and Proposed Settlement of Stockholder Derivative Actions to its stockholders (“Notice”), which notifies stockholders of the potential settlement and resolution of certain of the pending derivative actions disclosed by Virgin Galactic in its reports filed with the Securities and Exchange Commission. The Derivative Actions are brought derivatively on behalf of nominal defendant Virgin Galactic and allege that, inter alia, between July 10, 2019, through October 14, 2021, at least, the Individual Defendants breached their fiduciary duty to the Company by (i) misrepresenting operations to the investing public, who purchased Company stock at artificially inflated prices; (ii) causing the Company to overpay with stock spent to acquire Virgin Galactic’s legacy business; and (iii) as to certain of them, selling Company stock while possessing material nonpublic information about material issues at artificially inflated prices. Plaintiffs allege that the Individual Defendants had knowledge of the destruction of the Company’s spaceship stabilizers in 2019, Federal Aviation Administration violations that led to grounding flights in 2021 and suspension of the Company’s license, and undisclosed delays in commercial launches due to needed repairs, but failed to disclose the same to investors, instead making a series of materially false and misleading statements touting the Company’s purported safety efforts, among other things, including in filings with the Securities and Exchange Commission and proxy solicitations governed by Section 14(a) of the Securities Exchange Act of 1934. The Derivative Actions allege that, as a result of the foregoing, the Company experienced reputational and financial harm. Defendants have denied and continue to deny each and all of the claims and allegations of wrongdoing asserted in the Derivative Actions. The consideration for the proposed Settlement includes: (1) a cash payment of two million seven hundred fifty thousand dollars ($2,750,000.00) (the “Cash Payment”), which the Defendants shall cause their insurer(s) to pay to Virgin Galactic; and (2) Virgin Galactic’s agreement to adopt and maintain certain corporate governance reforms and procedures, as outlined in Exhibit A to the Stipulation (the “Reforms”), which shall be maintained for three years. Additionally, Virgin Galactic shall pay, subject to Court approval, one million three hundred seventy-five thousand dollars ($1,375,000.00) to Plaintiffs’ Counsel for their attorneys’ fees and expenses (the “Fee and Expense Amount”) based on the substantial benefit that will be conferred upon the Company and its stockholders by the settlement consideration. Plaintiffs’ Counsel shall also apply to the Court for service awards to be paid to the five Plaintiffs in an amount of up to two thousand five hundred dollars ($2,500.00) each (the “Service Awards”), to be paid out of the Fee and Expense Amount. On July 28, 2026 at 11:00 a.m., a hearing will be held before the Honorable Orelia E. Merchant, at the United States District Court for the Eastern District of New York, 225 Cadman Plaza East, Brooklyn, NY 11201, in Courtroom 6C South (the “Settlement Hearing”), for the purpose of determining whether the Settlement should be approved as fair, reasonable, and adequate and whether the Court should approve the agreed-to Fee and Expense Amount and the Service Awards for Plaintiffs. Because this is not a class action, except as otherwise provided for in the Stipulation with respect to the Plaintiffs, no Current Virgin Galactic Stockholder has the right to receive any individual compensation as a result of the Settlement. This Summary Notice provides a condensed overview of certain provisions of the Stipulation and the full Notice of Pendency and Proposed Settlement of Stockholder Derivative Actions (the “Notice”). It is not a complete statement of the events of the Derivative Actions or the terms set forth in the Stipulation. This summary should be read in conjunction with, and is qualified in its entirety by reference to, the text of the Stipulation. The Court may, in its discretion, change the date and/or time of the Settlement Hearing without further notice.
