Investors and creditors were hoping for more information on the recent Chapter 11 bankruptcy filing by GT Advanced Technologies Inc., which had plans of manufacturing synthetic sapphire for use in Apple Inc.’s new smartphone screens. However, a confidentiality agreement with Apple prevents GT from discussing the details of the supply and financing arrangement between the two companies.
A U.S. bankruptcy judge allowed for court papers detailing GT’s problems to be sealed. Breaking the confidentiality agreement could result in GT having to pay a third party — Apple — $50 million in damages, according to a lawyer for GT. The company reportedly owes $434 million to bondholders and $145 million to trade creditors. GT also had a $578 million financing arrangement with Apple.
According to the bankruptcy judge’s order, Apple must be given three days notice if GT intends to publicly discuss the companies’ business relationship. The notice will give Apple time to obtain a court order that prohibits public disclosure of information. In addition to sealing court documents, the judge instructed GT to file a motion requesting the wind-down of operations at the company’s manufacturing facilities.
GT is expected to file other motions seeking to end leases and contracts related to the company’s operations. A hearing on the wind-down is scheduled for Oct. 15 in Massachusetts.
A lawyer for GT said that the company is expected to accumulate about $152 million in total net operating losses by the end of the year, resulting in a potential $50 million in tax breaks.
The Wall Street Journal has more on the case.
For more on reorganization through bankruptcy, please visit our Chapter 11 overview. Attorneys at Shulman, Hodges & Bastion LLP provide legal guidance to creditors, creditor committees, debtors and trustees.