“Apple Inc supplier GT Advanced Technologies Inc argued on Thursday it could not reveal why it filed for bankruptcy and asked a court to keep crucial documents sealed, a highly unusual move that may keep investors in the dark about its unexpected financial implosion,” Ted Siefer and Tom Hals report for Reuters. “The company, which had been slated to provide Apple with scratch-resistant sapphire for future mobile devices, told the U.S. Bankruptcy Court it was barred from disclosures because it was ‘tied up in knots’ by a confidentiality agreement.”
“At the first public hearing since GT Advanced’s unexpected Monday bankruptcy filing, a lawyer for the company said the agreement also prevented it from revealing its Chapter 11 game plan,” Siefer and Hals report. “GT Advanced forged a deal last year with Apple that involved outfitting an Arizona factory to make sapphire exclusively for the iPhone maker. Apple, which zealously guards the secrecy of its product pipeline, has been known in general to place strict confidentiality requirements on its many suppliers.”
“Thursday’s request underscores the highly unusual nature of the case, starting with GT Advanced’s bankruptcy filing which caught everyone from Wall Street investors to Apple itself off guard,” Siefer and Hals report. “Lawyer Luc Despins of Paul Hastings told U.S. Bankruptcy Judge Henry Boroff an unspecified confidentiality agreement prevented GT Advanced from disclosing the cause of its bankruptcy, or its turnaround plan… The judge ended the two-hour public hearing by retreating to his chambers for a private meeting with GT Advanced and lawyers for Apple and the U.S. Trustee, a Department of Justice official who acts as a watchdog in bankruptcy cases.”
“GT Advanced acknowledged the request might be unprecedented but said it risked damages of $50 million per violation of the agreement. The company will return to court on Oct. 21 to ask the court to make permanent many of the orders that were entered on a temporary basis on Thursday,” Siefer and Hals report. “In the interim, Office of the U.S. Trustee will form an official committee of unsecured creditors which will play a key role in working with the company to draft a plan of reorganization. Boroff said he expected that GT Advanced would only have to provide creditors sensitive information if they signed a confidentiality agreement.”
Read more in the full article here.
MacDailyNews Take: The Wall Street Journal reports that Apple Inc. is indeed the source of the confidentiality agreement.
This thing is becoming quite the can of worms.
Apple, GT Advanced in secret session with bankruptcy judge – 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