“A bankruptcy judge is huddling privately with GT Advanced Technologies Inc. and Apple Inc. over the problems that sent GT into bankruptcy Monday, shocking investors and other backers and sending its stock price into a tailspin,” Peg Brickley reports for The Wall Street Journal. “GT’s unprecedented secrecy motion—a motion to seal and a request for a closed hearing—was filed at about 1 a.m. Thursday.”
“During a recess, Judge Henry Boroff dispatched a court official to order out of the courtroom the public and creditors who had assembled for the debut hearing in GT’s Chapter 11 case, while GT and Apple talk things over,” Brickley reports. “Discussions going on behind closed doors could well be the key to figuring out whether GT Advanced can reverse its fortunes in bankruptcy. Apple and GT linked up in a $578 million financing arrangement that transformed GT from a supplier of solar power equipment to a manufacturer of synthetic sapphire that was supposed to be used in Apple’s new smartphones. The iPhone 6 rolled out with Corning Inc.’s Gorilla glass instead, and GT filed for Chapter 11 protection in the U.S. Bankruptcy Court in New Hampshire, giving only a sketchy explanation of its financial situation.”
“Setting out in public view “the full causes of the filing and the game plan in the case” could put GT at risk of being hit with $50 million in damages from a third party that has bound it to such secrecy that it can’t even discuss the confidentiality arrangements, Mr. Despins said. Later, a courtroom reference confirmed the third party is Apple,” Brickley reports. “Meanwhile, GT Thursday won interim court approval of rules restricting trading for holders of more than 4.75% of the stock. That is a bow to Internal Revenue Service rules that limit the use of net operating losses when companies undergo a change in control.”
Read more in the full article here.
Related articles:
Apple supplier GT Advanced: Confidentiality pact rules out bankruptcy explanation – October 9, 2014
Apple ‘surprised’ by GT Advanced’s bankruptcy filing – October 8, 2014
Shattered sapphire dreams at GT Advanced – October 8, 2014
Apple’s withholding of $139 million payment led to GT Advanced bankruptcy filing – October 7, 2014
GT Advanced CEO sold 9,000 shares the day before Apple’s iPhone 6/Plus event – October 7, 2014
Law firms launch investigations into possible violations of federal securities laws by GT Advanced – October 7, 2014
Analyst: Apple may take possession of sapphire furnaces from GT Advanced – October 7, 2014
Apple to provide debtor in possession financing to GT Advanced? – October 7, 2014
Investors stunned over GT Advanced bankruptcy filing – October 7, 2014
GT Advanced files for chapter 11 bankruptcy court protection – October 6, 2014
Apple and GT Advanced rampup sapphire production in Mesa – August 11, 2014
GT Advanced expects sales of sapphire production tools to boost profit; shares surge – August 5, 2014
Apple and GT Advanced open second sapphire plant in Salem, Massachusetts – June 19, 2014
Apple patents method for embedding sapphire displays in LiquidMetal device chassis – May 27, 2014
…yet purchased Beats for $3,000,000,000.00.
Jimmy Iovine is worth more to Apple than that.
uh, no he ain’t.
Look’s like Apple is going into the sapphire business.
Uh oh. The word ‘secret’. Cue the analcyst bletherfest!
Like a hair trigger
There’s nothing “unprecedented” about a secrecy motion. It’s written into the bankruptcy code and is used in order to honor 3rd party contracts regarding confidentiality during a bankruptcy. It happens.
Yep – apple is going to buy the company.
Makes perfect sense. And they will get the company cheap too!
I just bought 1000 shares of GTAT just to see what happens. I suspect that GTAT missed a testing or production target that they agreed to in their contracts with Apple. Apple therefor withheld their final payment temporarily, until the goal could be met, not realizing that they were putting GTAT in a cash squeeze. GTAT then saw its best option as Chapter 11 in order to ease the cash squeeze. I think Apple will bail them out if the court agrees.
In any case, I’m just following Warren Buffet’s strategy, “When others are fearful, be greedy.”
I’m sure you’re correct, and Apple may have underestimated GTAT’s financial ability to continue operations without that payment. My guess is GTAT is using this as leverage to get Apple to work with it while it sorts out the production problems and to get Apple to pay it at least some of the payment that Apple withheld.
Oh no! Secret NSA links built into every sapphire home button. No, not right. If it was the NSA, they wouldn’t even be able to tell the court they weren’t telling the court.