GT Advanced to Request to Wind Down Sapphire OperationsDawn McCarty
GT Advanced Technologies Inc. plunged more than 17 percent in after-hours trading after a judge told the bankrupt Apple Inc. supplier to immediately file its motion to shut down synthetic sapphire production.
U.S. Bankruptcy Judge Henry Boroff’s order followed a request by GT Advanced to file certain documents under seal. It had requested the secrecy to avoid violations of confidentiality agreements that it said could have cost it millions of dollars in damages. Boroff said the company can keep the details of its dealings with Apple confidential and gave GT Advanced permission to file documents under seal that outline its liquidity crisis.
A closed-door hearing with GT Advanced and lawyers for Apple and the U.S. Trustee was held after Boroff ended yesterday’s two-hour public hearing. Boroff set a hearing for Oct. 15 in Springfield, Massachusetts, to consider the motion.
GT Advanced stunned investors this week when it filed for bankruptcy without specifying the cause, saying only that it had a “severe liquidity crisis.” At the time, the company said it expected to conduct “business as usual” while it developed a reorganization plan.
The non-disclosure of what sent the company to bankruptcy court leaves trade creditors owed about $145 million and bondholders owed about $434 million in the dark.
The Merrimack, New Hampshire-based company had reoriented its operations from supplying materials and equipment for solar panels and chips to manufacturing synthetic sapphire, which makes screens on mobile devices tough and scratch resistant.
GT Advanced in November announced a multiyear agreement to supply Apple with sapphire. The company lined up $578 million in prepayment loans from Apple to pay for the equipment to make the material, which wasn’t included in the latest version of the iPhone. The final payment of about $139 million was expected this month.
GT Advanced will also seek permission to reject certain contracts and unexpired leases in connection with the wind down as well as approval to pay an employee incentive plan, court papers show.
Although Boroff said the motions must be presented unredacted, he did give permission to withhold some information from the public.
GT Advanced must provide “all such information as shall be reasonably requested to any party in interest and the United States Trustee and, in the debtor’s sole discretion to the public press, except that in the event that any such information relates to the details of the debtors’ business relationship with Apple,” Boroff said in court papers.
Jeff Nestel-Patt, spokesman for GT Advanced, didn’t immediately respond to requests yesterday seeking comment on the ruling.
GT Advanced listed assets of $1.5 billion and liabilities of $1.3 billion as of June 28 in a Chapter 11 filing this week.
The case is In re GT Advanced Technologies Inc., 14-11916, U.S. Bankruptcy Court, District of New Hampshire (Manchester).