Apple avoids threat of legal action with modified GT Advanced bankruptcy settlement

Posted:
in General Discussion edited December 2014
A lawyer representing sapphire maker GT Advanced Technologies on Monday said the company has agreed to a new set of terms in its settlement with Apple, with the redrafted arrangement assuaging concerns from jilted creditors seeking to derail proceedings by threatening legal action against Apple.



A New Hampshire bankruptcy court judge signed off on an amended settlement from GT Advanced and Apple meant to stave off creditors that wanted to turn GT's bankruptcy into a litigious free-for-all, reports The Wall Street Journal.

As noted in various court filings, both creditors and Apple are walking away from potential lawsuits stemming from GT's surprise Chapter 11 bankruptcy protection filing from October. GT, Apple and creditors all claim being the victim.

Creditors, which helped finance part of GT's $900 million sapphire gamble, argued Apple could face numerous suits in relation to its actions when in partnership with GT, which failed to provide quality sapphire on a timeline stipulated by a stringent contract. Apple said it was cast in a poor light after privileged documents came to light as part of GT's bankruptcy proceedings, while GT itself previously called Apple's demands "oppressive and burdensome."

As for the new deal, GT Advanced still plans to sell off some 2,000 sapphire furnaces installed at Apple's Mesa, Ariz. facility in a bid to exit bankruptcy protection, but will take more cash per transaction. Along with a higher take of asset sales, GT will also get rights to store outgoing furnaces at Mesa for an additional three months, rent free.

According to in-court reports from Reuters, GT Advanced lawyer Luc Despins said he anticipated furnaces would sell for at least $500,000 each, with Apple getting a $169,000 cut for the first 500 sold. Under the firms' previous agreement, Apple was expecting $200,000 for each of first 500 furnaces sold.

Apple inked a $578 million deal with GT in 2013, hoping to secure a steady supply of sapphire material for use in future products. A solid manufacturer of furnaces and other equipment related to sapphire production, GT had no experience in operating its own machinery, court filings have shown. Instead of outsourcing the job, GT chose to hire its own workforce to run Mesa, though it appears the firm bit off more than it could chew as errors in management, poor yields and other issues quickly led to ballooning production costs.

In September, GT informed Apple of its financial problems and asked for further assistance. Apple offered to pay $100 million of a prescheduled $139 million payment, as well as delay repayment due dates, even though GT had not met contractual production goals. At that point in the relationship, Apple had already paid out over $439 million to GT, not including an additional $700 million spent on infrastructure.

A copy of the amended deal and list of assets currently at Mesa are embedded below:

Comments

  • Reply 1 of 8
    sflocalsflocal Posts: 4,493member
    How does one dispose of something that is almost as hard as a diamond? Can these 500lb. blocks be somehow cut into more useable pieces for other uses? It seems like such a waste of resources.
  • Reply 2 of 8
    sflocal wrote: »
    How does one dispose of something that is almost as hard as a diamond? Can these 500lb. blocks be somehow cut into more useable pieces for other uses? It seems like such a waste of resources.

    Re-heat to melting in vats that can be designed to then offshoot a controlled amount into vats that have designed forms that can then be sold off to third parties for other uses.
  • Reply 3 of 8
    Quote:
    Originally Posted by sflocal View Post



    How does one dispose of something that is almost as hard as a diamond? Can these 500lb. blocks be somehow cut into more useable pieces for other uses? It seems like such a waste of resources.



    Obviously they can be cut. Did you really think Apple was going to use a 500lb. boule for a single product? 

  • Reply 4 of 8
    Re-heat to melting in vats that can be designed to then offshoot a controlled amount into vats that have designed forms that can then be sold off to third parties for other uses.

    May as well toss in the GT management as well. Their noggins are probably as hard as that sapphire.
  • Reply 5 of 8

    Okay, that is interesting the other lenders were threatening to sue apple over this. I guess they were thinking that Apple being the a creditor as well as the customer who ultimately caused it all to fall apart put the other lenders at more risk. It sounds like the lenders did not get to see the agreement that GT was signing up under, shame on them, they had no ideal what they were loaning money for. Most lenders want to see the terms of the agreement. Since GT was not allow to share the agreement they allowed them to scam the lenders.

  • Reply 6 of 8

    It can be recycles, when they make sapphire they take raw Aluminum Oxide and what they call crackle (pieces of broken sapphire) put them in the furnace together to make new sapphire. I am not sure if it all can be reused since some of it looks to be discolored. But they could break it all up and use it over time.

  • Reply 7 of 8
    haggarhaggar Posts: 1,568member

    Quote:
    Originally Posted by sflocal View Post



    How does one dispose of something that is almost as hard as a diamond? Can these 500lb. blocks be somehow cut into more useable pieces for other uses? It seems like such a waste of resources.

     

    Use it to make another Apple retail store.

  • Reply 8 of 8
    hill60hill60 Posts: 6,989member

    It seems like whoever made the decision to make the sapphire themselves is to blame, kind of like Ford or Chevrolet executives deciding that they will drive the company's race cars.

     

    Can't they lease these furnaces out to skilled operators?

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