GT Advanced shocked investors by filing for bankruptcy in October in a case that was initially shrouded in secrecy due to confidentiality agreements with Apple. GT Advanced’s chief operating officer has said in court papers that the iPhone maker pulled a “bait and switch” to force the sapphire maker into a money-losing deal in 2013.
Apple agreed to release GT Advanced from the deal and allow it to sell more than 2,000 sapphire furnaces located in Mesa, Arizona.
The agreement needs approval by US Bankruptcy Court Judge Henry Boroff, who has been hearing the Chapter 11 bankruptcy case in Springfield, Massachusetts. He is not too happy about things dot com.
But holders of GT Advanced’s notes, including Aristeia Capital and an affiliate of Wolverine Asset Management, said in court papers the “extraordinary allegations against Apple … call into question the adequacy of the settlement agreement.”
The concept that Apple breached its contract and acted unfairly as GT Advanced’s lender and the fact that Apple’s claims on GT Advanced’s equipment were unsecured would put Jobs’ Mob among the last creditors to be paid, not the first as Apple claimed.
Apple has denied GT Advanced’s allegations. In court filings, Apple has called the accusations “scandalous and defamatory” and “intended to vilify Apple and portray Apple as a coercive bully.”
However, the noteholders want access to internal records and documents from Apple and GT Advanced to investigate if the settlement lets Apple off too cheaply. The noteholders asked Boroff to postpone the settlement hearing, currently scheduled for Nov. 25, to give them time to complete their investigation.
GT Advanced said it is negotiating with potential buyers for its sapphire furnaces and said in court papers an extended delay in approving the Apple settlement could hurt its ability to reorganise and repay its creditors.