Creditors backing GT Advanced Technologies have successfully pushed back an approval date for the company's settlement with Apple, saying an investigation will determine whether the sapphire maker was given short shrift in the agreement.
In a series of court filings on Tuesday, GT Advanced noteholders, including Aristeia Capital and Sumitomo, asked for and received an extension to the approval deadline set for a proposed settlement with Apple, reports Reuters.
After signing a $578 million contract to provide Apple with sapphire material last November, GTAT filed for Chapter 11 bankruptcy protection in October, a move that surprised both investors and Apple.
Apple, which bought land and developed a sapphire manufacturing facility in Mesa, Ariz., ultimately paid GTAT $439 million over the past year, but withheld the last $139 million payment after the firm failed to deliver on contractual production goals. According to Apple, another $700 million was spent on infrastructure and other costs associated with the project.
For its part, GTAT said Apple's terms were unsustainable, characterizing the deal as "oppressive and burdensome."
In a bankruptcy settlement reached last month, GTAT agreed to sell off more than 2,000 sapphire furnaces to pay off its $439 million debt to Apple.
Presiding U.S. Bankruptcy Court Judge Henry Boroff was originally scheduled to oversee a settlement hearing on Thursday, but creditors filed motions for more time, saying "extraordinary allegations against Apple [...] call into question the adequacy of the settlement agreement." Specifically, the argument cites legal claims from GTAT COO Daniel W. Squiller, who accuses Apple of pulling a "bait-and-switch" deal that was overly favorable to Apple, which supposedly took no risk in the venture. The onus ultimately fell on GTAT, the company said.
Creditors further allege that Apple breached its contract with GTAT, adding that claims on GTAT equipment may potentially be unsecured. According to the publication, this would place Apple at the back of the pack when GTAT starts paying out outstanding debt.
Judge Boroff agreed to the extension and rescheduled the settlement hearing to Dec. 10. In the meantime, noteholders are requesting Apple and GTAT provide documents and records to carry out their investigation.
In its own court filing, GTAT opposed the extension, noting the delay could hinder negotiations with potential equipment buyers that would in turn delay returns to lenders.
19 Comments
Bleh.
Let's assume that Apple was a big meanie in this and demanded terms that were unfair etc from GTAT. Then why did GTAT accept those terms? There is no rule that you have to accept whatever terms Apple offers. Apple tried to buy Dropbox and the Dropbox guys said "no thanks", even though they apparently are big fans of SJ and Apple.
I get the general sense that there's no place at Apple, or in Apple's supply chain, for wussies. If you aren't the type of person who knows what you believe in and can stand up for it, then you should not work for Apple or do business with Apple.
[quote name="Blastdoor" url="/t/183512/gt-advanced-creditors-investigating-apple-settlement-call-for-approval-extension#post_2642151"]Let's assume that Apple was a big meanie in this and demanded terms that were unfair etc from GTAT. Then why did GTAT accept those terms? There is no rule that you have to accept whatever terms Apple offers. Apple tried to buy Dropbox and the Dropbox guys said "no thanks", even though they apparently are big fans of SJ and Apple. I get the general sense that there's no place at Apple, or in Apple's supply chain, for wussies. If you aren't the type of person who knows what you believe in and can stand up for it, then you should not work for Apple or do business with Apple. [/quote] As someone that lost a load of $s in GTAT stock I totally agree with you. In fact I feel the management of GTAT are the ones that should be in the dock not Apple.
They're pointing fingers at Apple because Apple has money, GTAT has none. Despite the fact that GTAT's management was/is incompetent at best and criminal at worst.
if the agreement wasn't in the best interests of gt then responsibility for acceptance of that agreement should fall on the shoulders of the management team. do those guys take responsibility for anything (other than making sure their stock trades were executed)?