Vertical Aerospace, which was founded by Mr Fitzpatrick in 2016 and is listed on the New York Stock Exchange, has racked up tens of millions of pounds in losses over recent years.
Its recent financial woes prompted the latest rescue offer from Mudrick, which wrote to the board of Vertical last week.
The New York-based fund unveiled details of its package, which includes a pledge to retain Vertical Aerospace’s headquarters in the UK and remove Mr Fitzpatrick’s veto rights.
It also offered to drop the threat of legal action against Mr Fitzpatrick should the rescue deal be waved through.
The letter said: “We believe this proposal represents a meaningful improvement for the company and all its stakeholders, including existing shareholders, which is possible due to material economic concessions from us.
“Under our proposal, existing shareholders would receive a substantial ownership stake in a deleveraged business.
“We would stress that the unfortunate alternative, a comprehensive restructuring transaction, will result in existing shareholders receiving zero stake in the ongoing enterprise.”
A spokesman for Vertical Aerospace said: “The company has consulted with Mudrick Capital who have confirmed to the company that no claim against Mr Fitzpatrick or the company has been served.
“Mr Fitzpatrick has also confirmed that he has not received any claim. Discussions are ongoing between stakeholders to reach a funding solution. The board remains fully supportive of these discussions.”