On Tuesday, an agreement was reached between Apple and GT Advanced Technologies Inc. that will allow GT to initiate the shutting down of major Arizona operations and also give some idea as to how the former darling of the stock market filed for bankruptcy this month completely out of the blue. GT is the erstwhile sapphire supplier of the American giant and the deal between the two was described by a lawyer of GT in US Bankruptcy Court in Springfield at a hearing. He said that it would enable the company to save some money and be more open about its filing of Chapter 11 on October 6.
Since the filing, only scant details have been released, which have wiped out most of the market value of GT and given rise to speculation as to what caused the company’s relationship with Apple to go sour. Nonetheless, it is still unclear as to how much information GT would be allowed to share under the agreement signed with Apple, which has been verbally described by the lawyer, but there has been no mention of it in court filings. The bankruptcy hearings of GT have attracted the attention of the industry experts who wish to gain an insight into how the most valuable tech company of the world runs its secretive production and supply chain that’s spread from the United States to China.
The iPhone maker is known to exact demands and standards from its suppliers that don’t leave a lot of room for profitability. In regular cases of Chapter 11 bankruptcy, the reason for the bankruptcy is usually revealed in key court filings, but in GT’s case, they have been done in secret. Confidentiality requirements had been cited by GT Advanced in its contacts with Apple, which carry a fine of $50 million if they are violated.
Lawyers of both the firms were able to reach an agreement on Tuesdays that would allow GT to sell more than 2000 furnaces, which are installed in the plant financed by Apple in Mesa, Arizona. An undisclosed portion of the profits will be given to the Cupertino, California-based company. An attorney of GT, Luc Despins, described the deal as an amicable split without the need for litigation. In accordance with the deal, GT would be able to offer more detail about why it went bankrupt in the first place.
However, parties who have asked for transparency, which includes the state of New Hampshire where the company is based, were quite skeptical during the hearing. They stated that it isn’t yet clear as to how much information will be provided to the public and when. Despins said that more detail regarding the settlement would be filed by GT till Friday. Tentative scheduling of a court hearing for the deal has been done for November. The highly unusual nature of the case is highlighted by the request of keeping the documents secret because this bankruptcy filing caught almost everyone off guard, from Apple Inc. to Wall Street.