GT Advanced creditors investigating Apple settlement, call for approval extension

Posted:
in General Discussion edited November 2014
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.

Touch ID


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.

Comments

  • Reply 1 of 19

    Bleh.

  • Reply 2 of 19
    blastdoorblastdoor Posts: 1,889member

    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. 

  • Reply 3 of 19
    MacProMacPro Posts: 18,003member
    blastdoor wrote: »
    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. 

    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.
  • Reply 4 of 19
    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.
  • Reply 5 of 19
    poochpooch Posts: 768member
    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)?
  • Reply 6 of 19
    Like others here, I too lost a chunk of coin in GTAT stock. But, I'm not bitter. But, I do think GTAT (with their selling of GTAT stock the day before the iPhone event and their overall poor management skills) is looking like a big crybaby with every press release that comes out. I concur with other posters who point out, GTAT had NO obligation to enter into the agreement with AAPL. For GTAT to gripe and try and sue AAPL is simply ridiculous and further shows how unscrupulous the GTAT management is.
  • Reply 7 of 19
    sflocalsflocal Posts: 4,425member

    So can I start a company (GT) using other people's money (Apple), burn through it all, take whatever is left and run with it, then the people I screwed can go after the people that gave me the money?  



    Where do I sign up for this sweet deal?!

  • Reply 8 of 19
    crowleycrowley Posts: 5,736member
    Quote:

    Originally Posted by Blastdoor View Post

     

    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?


    The argument as I read it was that GTAT entered into negotiations with Apple in good faith, put lots of time and effort into those negotiations, passing up other potential business deals, and were then subject to something of a bait-and-switch by Apple, where they pulled a Darth Vader and changed most aspects of the deal.  At that point GTAT were faced with a choice between a difficult, but still potentially lucrative arrangement, or no arrangement at all, months of work down the drain, and a lack of business for the immediate period.

     

    That may not be gun-to-the-head pressure, but it's still a huge amount of pressure, and, if true, that's pretty crappy behaviour from Apple.  Doubt it's illegal or anything, but it may well be a source of some mitigation in favour of GTAT and against Apple in the bankruptcy procedures.

  • Reply 9 of 19
    GTAT is trying to slowly weasel out of the whole situation. One thing I have learned about Apple is they are patient and precise.
  • Reply 10 of 19

    Some many seem to misunderstand what this is about. It is not about GTA's stupidity or being "weenies" or possibly illegal stock transactions. It's about one thing - Other unsecured creditors asking the Judge if Apple is getting preferential treatment for their claims at the expense of other creditors. This is SOP in a bankruptcy like this. The terms Apple has negotiated will be challenged by other creditors who are getting less. The Judge is obligated to delay the proceedings while he looks into the issues raised by the other creditors. If the deal Apple got is on the up and up, the settlement will move forward. It can hardly be surprising to any of you that other creditors getting bupkus are upset and would like Apple to be in the same position as they are in. It is not likely they will be successful. Apple is unlikely to have have left this door ajar. Whether or not Apple is bully in this is not relevant and the Judge will not care. Legality is the only issue. Lawyers make their money by lawyering and convincing their clients they have a case whether or not any sane person knows they don't. Moral rights and wrongs have nothing to do with this.

  • Reply 11 of 19



    This has ZERO to with whether or not GTAT is a bunch of weasels. If you read the article you would have understood they are in favor of the settlement deal and are not aligned with what they other creditors are saying. This is about possibly preferential treatment received by one creditor at cost to other creditors.

  • Reply 12 of 19



    Wrong. That's not what is going on here.

  • Reply 13 of 19
    Quote:

    Originally Posted by richlo View Post



    GTAT is trying to slowly weasel out of the whole situation. One thing I have learned about Apple is they are patient and precise.

     

    What?



    "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."

  • Reply 14 of 19
    realisticrealistic Posts: 1,126member
    Quote:

    Originally Posted by Crowley View Post

     

    The argument as I read it was that GTAT entered into negotiations with Apple in good faith, put lots of time and effort into those negotiations, passing up other potential business deals, and were then subject to something of a bait-and-switch by Apple, where they pulled a Darth Vader and changed most aspects of the deal.  At that point GTAT were faced with a choice between a difficult, but still potentially lucrative arrangement, or no arrangement at all, months of work down the drain, and a lack of business for the immediate period.

     

    That may not be gun-to-the-head pressure, but it's still a huge amount of pressure, and, if true, that's pretty crappy behaviour from Apple.  Doubt it's illegal or anything, but it may well be a source of some mitigation in favour of GTAT and against Apple in the bankruptcy procedures.




    Pure BS! What other deals did they pass up? Any company, even Apple, can't just change the terms of a signed contract at will. Without the Apple deal GTAT basically had no business as their business had already tanked prior to signing the contract agreement with Apple.

  • Reply 15 of 19
    Quote:

    Originally Posted by Realistic View Post

     



    Pure BS! What other deals did they pass up? Any company, even Apple, can't just change the terms of a signed contract at will. Without the Apple deal GTAT basically had no business as their business had already tanked prior to signing the contract agreement with Apple.


     

    Hey, this is @Crowley you are responding to! He has a history..

  • Reply 16 of 19
    davendaven Posts: 496member
    No risk? As of right now, Apple is out $439 million. I'd say Apple has more skin in the game than anyone else.
  • Reply 17 of 19
    crowleycrowley Posts: 5,736member
    Quote:

    Originally Posted by Realistic View Post

     



    Pure BS! What other deals did they pass up? Any company, even Apple, can't just change the terms of a signed contract at will. Without the Apple deal GTAT basically had no business as their business had already tanked prior to signing the contract agreement with Apple.


    You misunderstand.  The allegation is that Apple drastically changed the terms shortly before GTAT signed, but by that point GTAT had sunk a lot of resources and planning into the Apple contract, so had no real negotiating position, which Apple exploited.

     

    Is there evidence that GTAT's business had "tanked" prior to signing the contract?

     

    Quote:

    Originally Posted by BestKeptSecret View Post

     

     

    Hey, this is @Crowley you are responding to! He has a history..


    Huh?  A history of what?

  • Reply 18 of 19
    Quote:
    Originally Posted by Crowley View Post

     

    You misunderstand.  The allegation is that Apple drastically changed the terms shortly before GTAT signed, but by that point GTAT had sunk a lot of resources and planning into the Apple contract, so had no real negotiating position, which Apple exploited.

     


     

    I understand what you are saying here. A lot of work and planning have to be done even before the contract is officially signed. So Apple can't just change the requirements a few weeks before the signing date - like they increase the size of the sapphire boules they want by 20% which supposedly is what happened.

     

    But I haven't seen any definitive proof that this is what occurred.

  • Reply 19 of 19

    Maybe Apple breached contract or maybe you're at fault... I don't know the complete details and it doesn't really matter because at the end of the day, you're fighting Apple and that's NOT a good place to be.

     

    This whole thing sucks and I can't wait for it to be over with.

Sign In or Register to comment.