Apple, GT Advanced agree to unseal secret documents as part of bankruptcy settlement

Posted:
in General Discussion edited November 2014
In a ruling on Tuesday, a federal court judge handling bankruptcy proceedings for sapphire maker GT Advanced Technologies ordered to unseal sensitive documents detailing the company's doomed partnership with Apple.



U.S. Bankruptcy Court Judge Henry J. Boroff found a number of disclosures provided by GT Advanced to fall outside the scope reason that would protect them from being made public, nullifying Apple's imposition of confidentiality agreements. Prior to today's ruling, GTAT asked that the sensitive documents be kept sealed to avoid litigation from Apple.

"GT Advanced Technologies Inc. today announced that it has signed an amendment to the Settlement Agreement with Apple under which both parties have agreed to waive the condition that GT's October 8th declaration be kept under seal and expunged," GT Advanced said in a statement published to its website.

Among the multiple documents to be unsealed is an Oct. 8 statement from GTAT that outlines in detail the firm's agreement to supply Apple with sapphire material for use in "future products." The exact nature of these products is unknown, though the currently sealed papers could potentially shed light on Apple's former sapphire roadmap.

While Judge Boroff ordered to unseal a multitude of secret papers, he also ruled in favor of keeping certain portions and exhibits out of the public eye. Specifically, the jurist found two documents to contain sensitive corporate information.

The documents in question, including audio and written transcript of an "in camera" hearing, will remain sealed until 12 p.m. on Nov. 7.

Some background on the deal was aired in an October statement from GTAT COO Daniel W. Squiller, who placed blame on "unsustainable" contract terms dictated by Apple, which reportedly cost the company some $461 million. Squiller cited higher than expected manufacturing costs, technical hangups and production deficiencies as main contributors to the deal's downfall.

Apple and GTAT reached a settlement agreement in October that has the sapphire maker repaying its debt to Apple with the selloff of more than 2,000 Advanced Sapphire Furnaces (ASFs). The agreement was previously contingent on keeping GTAT's bankruptcy documents sealed.

A U.S. Securities and Exchange Commission report filed on Tuesday shows GT plans to meet capital owed by selling ASFs for $200,000 for the first 500 units sold,
$250,000 per unit for the next 500 and $290,000 per unit for the remainder until its debt is paid off.

Last November, Apple inked a $578 million contract with GTAT to provide sapphire material for future products, which would extend the tech giant's use of the hard material beyond cover glass for the iPhone's rear-facing camera and Touch ID home button. Apple ultimately put $439 million into the project, but withheld a final $139 million payment to GT after the firm failed to deliver on contractual production goals.

GT Advanced filed for Chapter 11 bankruptcy protection last month and as part of its Wind-Down plan will use the Apple-owned Mesa, Ariz., sapphire facility rent free for one year. Last week, it was reported that GT is going to eliminate more than 700 jobs from Arizona plant operations by December.
«1

Comments

  • Reply 1 of 26
    I would be surprised if any concrete details on "future products" will come out of this. Apple would have no need to provide GT with anything more than the basic details of the sapphire they required. Of course that could be used to speculate on new products. Hopefully any sensitive corporate information that would benefit Apple's competitors is not made public or inadvertently leaked..
  • Reply 2 of 26
    solipsismysolipsismy Posts: 5,099member
    lolliver wrote: »
    I would be surprised if any concrete details on "future products" will come out of this. Apple would have no need to provide GT with anything more than the basic details of the sapphire they required. Of course that could be used to speculate on new products. Hopefully any sensitive corporate information that would benefit Apple's competitors is not made public or inadvertently leaked..

    I don't know if GTAT was responsible for cut sapphire components but I'd think any specifics would be simply for camera lenses, home buttons, ?Watch sensor covers, ?Watch displays, and iPhone displays. I can't really see anything else and only one of those hasn't ever been stated by Apple as being on market or coming to market, as far as I know.
  • Reply 3 of 26
    slurpyslurpy Posts: 5,385member
    This might get ugly. Hopefully has no negative effect on the stock.
  • Reply 4 of 26
    melgrossmelgross Posts: 33,585member
    It's a shame. This work could have been saved if both parties had agreed to take a hit in the short term.
  • Reply 5 of 26
    lilgto64lilgto64 Posts: 1,147member
    Quote:
    Originally Posted by melgross View Post



    It's a shame. This work could have been saved if both parties had agreed to take a hit in the short term.



    Unless one side so grossly overestimated the potential - either intentionally or otherwise - that in the end there could be no solution.

     

    What is "unsustainable contract terms"? Is that not another way of saying "we could not live up to our end of the bargain"?

  • Reply 6 of 26
    lilgto64 wrote: »

    Unless one side so grossly overestimated the potential - either intentionally or otherwise - that in the end there could be no solution.

    What is "unsustainable contract terms"? Is that not another way of saying "we could not live up to our end of the bargain"?

    Something tells me they better come up with something better then unsustainable contract terms if they want to beat lawyers of that ilk.
  • Reply 7 of 26
    chris_cachris_ca Posts: 2,543member
    Quote:

    Originally Posted by AppleInsider View Post



    Among the multiple documents to be unsealed is an Oct. 8 statement from GTAT that outlines in detail the firm's agreement to supply Apple with sapphire material for use in "future products." The exact nature of these products is unknown, though the currently sealed papers could potentially shed light on Apple's former sapphire roadmap.

    50”, curved sapphire television displays...

  • Reply 8 of 26
    chris_cachris_ca Posts: 2,543member
    Quote:

    Originally Posted by daveinpublic View Post

    Something tells me they better come up with something better than unsustainable contract terms if they want to beat lawyers of that ilk.

    fixed that for ya’...

  • Reply 9 of 26
    mpantonempantone Posts: 2,105member
    Quote:
    Originally Posted by Chris_CA View Post

     

    50”, curved sapphire television displays...




    Why?

     

    The primary benefits of sapphire glass are extreme hardness and scratch resistance. That's not a feature that's necessary for a television.

     

    Sapphire is useful for things that take a lot of physical abuse like wristwatch crystals and smartphone camera lens covers. How many times a day do you even touch a television screen? A week? A month?

     

    Moreover, sapphire glass has much lower light transmission rates than many other glass products. It makes zero sense as a display component for a television.

  • Reply 10 of 26
    mpantone wrote: »

    Why?

    The primary benefits of sapphire glass are extreme hardness and scratch resistance. That's not a feature that's necessary for a television.

    Sapphire is useful for things that take a lot of physical abuse like wristwatch crystals and smartphone camera lens covers. How many times a day do you even touch a television screen? A week? A month?

    My kids insist on touching the TV screen on a regular basis. Especially as they are only 3 and are more accustomed to touch screen iOS devices than TV's. However I also agree that a sapphire TV would be very unnecessary.
  • Reply 11 of 26
    mpantonempantone Posts: 2,105member

    That's fine, but your kids aren't touching the TV screen hard enough to scratch it unless they are throwing metal toys at it (at which point, I suggest you find a really good drywall contractor and window replacement specialist).

     

    It's mostly the nuisance of greasy fingerprints, right? Sapphire has no inherent oleophobic characteristics, so again sapphire glass provides nothing for a home TV set.

  • Reply 12 of 26
    mpantone wrote: »
    That's fine, but your kids aren't touching the TV screen hard enough to scratch it unless they are throwing metal toys at it (at which point, I suggest you find a really good drywall contractor and window replacement specialist).

    It's mostly the nuisance of greasy fingerprints, right? Sapphire has no inherent oleophobic characteristics, so again sapphire glass provides nothing for a home TV set.

    Totally agree. I was really just joking around about how my kids touching the TV which is why I said I still didn't see the need for sapphire on a TV. I'm not even sure it would really benefit an iPhone at this stage.
  • Reply 13 of 26
    joshajosha Posts: 901member
    Quote:

    Originally Posted by Slurpy View Post



    This might get ugly. Hopefully has no negative effect on the stock.



    My exact thoughts.

    It really surprises me that Apple invested so much in what appears now to be a failed technology.

  • Reply 14 of 26
    solipsismysolipsismy Posts: 5,099member
    slurpy wrote: »
    This might get ugly. Hopefully has no negative effect on the stock.

    If Apple loses any of their investment it'll be very minor compared to its wealth so the only way this directly affects the stock is which the media trying to spin it for a better story, but that's always short lived.

    GG3 seems to do what Apple wants for the iPhone 6 series display (assuming that was what they were trying), which is absolutely brilliant with the curved glass making it feel better than any other phone I've used.

    josha wrote: »
    It really surprises me that Apple invested so much in what appears now to be a failed technology.

    Man-made sapphire is not a failed technology. It's been in used Apple's products for years now and will continue to be used indefinitely.
  • Reply 15 of 26
    mde24mde24 Posts: 27member
    Quote:
    Originally Posted by daveinpublic View Post





    Something tells me they better come up with something better then unsustainable contract terms if they want to beat lawyers of that ilk.



    So, GTAT management are admitting "we signed an oppressive and burdensome contract" which caused a temporary increase in the stock price allowing the same management to cash out their holdings at a large personal profit. A few days later they file for bankruptcy, losing the regular shareholders more-or-less everything.

     

    Anyone else see a class-action suit looming on the horizon here?

  • Reply 16 of 26
    nobodyynobodyy Posts: 377member
    Quote:

    Originally Posted by mde24 View Post

     



    So, GTAT management are admitting "we signed an oppressive and burdensome contract" which caused a temporary increase in the stock price allowing the same management to cash out their holdings at a large personal profit. A few days later they file for bankruptcy, losing the regular shareholders more-or-less everything.

     

    Anyone else see a class-action suit looming on the horizon here?




    THIS is exactly what I wanted to see drilled out.

     

    As sure as I am that they couldn't keep up with Apple's demands, I'm also sure (and we've seen) the upper management were quick to cash out before shit had hit the fan. 

  • Reply 17 of 26
    maestro64maestro64 Posts: 5,043member

    yeah this is going to get ugly, and this is probably what GTAT choose a local court who had very little experience with dealing with big companies. Most likely if they filed in NYC or Delaware who tend to be more corporate friendly this probably would not have been an issue. GTAT what to use apple need for secrecy against them to get what they wanted which was out of the agreement and made whole.

  • Reply 18 of 26
    lilgto64 wrote: »

    Unless one side so grossly overestimated the potential - either intentionally or otherwise - that in the end there could be no solution.

    What is "unsustainable contract terms"? Is that not another way of saying "we could not live up to our end of the bargain"?

    I read: unsustainable = unprofitable. As in negative profits, i.e., losses.

    I think it means they underestimated the cost of producing sapphire to Apple's specifications. When try realized what it would cost, under the terms of their original deal, they would not be able to make it work.

    This is just my speculation, of course. Maybe it will change when more information comes out.
  • Reply 19 of 26
    chris_cachris_ca Posts: 2,543member
    mpantone wrote: »

    Why?
    Seriously you are asking?
    Because I wrote it in jest...

    But if they could produce sapphire crystals that big, they would not have gone under and would likely have quickly surpassed Apple as the worlds largest company by market cap.
  • Reply 20 of 26
    chris_cachris_ca Posts: 2,543member
    mpantone wrote: »
    That's fine, but your kids aren't touching the TV screen hard enough to scratch it unless they are throwing metal toys at it (at which point, I suggest you find a really good drywall contractor and window replacement specialist
    And if they were throwing metal toys at it, then sapphire would be perfect for a television.
    THIS IS WRITTEN AS A JOKE!!!!
    (But seriously, sapphire would be a good choice in this instance. Throwing metal objects at a screen)
Sign In or Register to comment.