GT Seeks to Void 'Oppressive and Burdensome' Agreements With Apple, Outlines Sapphire Wind Down Process

[MacRumors]

Yesterday, lawyers for Apple's bankrupt sapphire production partner GT Advanced Technologies notified the court that the company would be seeking to "wind down" operations at its sapphire production facilities in Arizona and Massachusetts, while also pursuing efforts to escape from contracts related to those operations.

In a pair of filings today, GT has followed through on those plans, with one filing asking for court approval to void its contracts related to the operation, calling the terms of its contracts with Apple "oppressive and burdensome."

As discussed in detail in the Supplemental First Day Declaration, the agreements imposed oppressive and burdensome terms and obligations on GTAT. The contracts and leases...provide no benefit to GTAT's estates, and GTAT's continued performance under the Agreements is no longer a viable business option. [...]

GTAT has determined that the Agreements are no longer necessary for GTAT's business operations. The Agreements also are not a source of potential value for GTAT's future operations, creditors, or interest holders and constitute an unnecessary drain on GTAT's resources.

GT believes it will be able to pursue further claims against Apple, but is unable to do so at this stage of the Chapter 11 bankruptcy proceedings, and so has asked that the agreements be voided while maintaining its right to pursue future claims against Apple related to the agreements.

GT's second filing addresses the wind down procedure for its sapphire production facilities, noting that sapphire boules currently being grown in furnaces are valued at roughly $20,000 each and take up to 30 days to grow, and thus it is in the interest of the company and its creditors to allow boules already being grown to be completed.

[M]erely "pulling the plug" is not a viable option given the significant value of GTAT's equipment at these facilities (most notably, the sapphire growing furnaces) as well as the significant value of the sapphire boules that are currently being grown in the furnaces (a process that can take up to 30 days). For these reasons, GTAT has developed the Wind Down Process, which will allow GTAT to wind down its sapphire manufacturing operations in as orderly a manner as possible while preserving the value of its assets.

The first stage of GT's Wind Down Process involves maintaining a crew of 75 employees to monitor ongoing sapphire growth and then remove the boules and prepare them for sale, a process expected to be completed by mid-November. The second stage, requiring 15 employees, involves the cleaning and decommissioning of the furnaces themselves to preserve their value. Finally, roughly 35 employees will be needed to "shut down and clean up" the Arizona facility, with final closure coming by December 31.

Overall, GT projects that 890 employees will lose their jobs with the shutdown, with the company seeking approval to spend approximately $65,000 in incentives to ensure certain qualified employees remain with the company during the wind down process.

Apple has not commented publicly on the matter beyond its initial statement expressing surprise at GT's bankruptcy filing and pledging to work to preserve jobs in the area.

(Image: GT sapphire furnace)

Article Link: GT Seeks to Void 'Oppressive and Burdensome' Agreements With Apple, Outlines Sapphire Wind Down Process

 

[maflynn]

Looks like they're chafing under the agreement and have been unable to keep afloat, maybe if apple used them for the iPhone 6, this wouldn't have been an issue.

 

[itsmemuffins]

Would no one think of the camera lens and home button?!

 

[d4rkc4sm]

lol this is getting juicy

 

[maflynn]

I wonder what claims GT has against apple, they signed the contract and now they're looking to get something from apple?

It will be interesting to hear as time goes on.

 

[coolant113]

Waiting for Apple to swoop in and buy them for a really good price...

 

[ogun7]

if it was so "burdensome & oppressive" to be a supplier for Apple, outside of going into an agreement with Apple in the first place, why would the CEO take almost $160K of stock value out of the company if its agreement with Apple created no value?

 

[piecloud]

Didn't they agree for these terms when they signed up to get half a billion dollars from Apple? They are just using bankruptcy to get away from keeping their part of the deal. It's could be a setback for bringing back hi tech manufacturing to US.

 

[The Barron]

Ka-Ching $

lol this is getting juicy

Along with getting juicy, the lawyers are licking their collective chops thinking about "Pay Day."

"Film at 11"

 

[AbSoluTc]

I'm curious as to what really happened.

 

[Dr. Echsel]

This has all unfolded so quickly.

 

[MacFather]

Deleted.

 

[cocky jeremy]

You signed the deal, suck it up and deal with it.

 

[8CoreWhore]

Apple is a bully and arrogant. They're like the guy yelling at the gate agent at an airport, "Do you know who I am?!"
Like businesses should kiss their feet because it's a big contract.

 

[JHankwitz]

Perhaps Samsung will buy them and make product for Android as well as Apple.

 

[CNeufeld]

Funny how they were willing to sign those "Oppressive and Burdensome" agreements when they involved a bunch of money coming to them, but now that they're no longer "benefitting GTAT's estates", they want them voided...

Clint

 

[Advil]

so they signed a contract then regret it and filed for bankruptcy? this sounds like it's being run by children...

 

[iSee]

Looks like they're chafing under the agreement and have been unable to keep afloat, maybe if apple used them for the iPhone 6, this wouldn't have been an issue.

No doubt. But I imagine there's at least one very good reason Apple didn't use them for the iPhone 6 screens.

But "Oppressive" and "Burdensome" are things they would have best considered before signing the agreements.

(Not that I know anything about Chapter 11 Bankruptcy proceedings. For all I know, perhaps these words simply reference certain kinds of relief that might be provided under Chapter 11.)

 

[mazz0]

Safari is snap-

Oh, sorry, wrong thread.

 

[diddl14]

Finally a real #xxxGate

 

[69Mustang]

I feel for the 900 people losing jobs, but I have no sympathy for GTA. An average person with little business acumen would have questioned the terms of that contract. I said yesterday it reminded me of a mob contract. But the big difference being GTA voluntarily entered into this agreement.

The contract was oppressive and burdensome when GTA signed it but I guess it didn't matter then. CEO extracts a crap ton of money from the deal and suddenly he realizes the deal wasn't good? Riiiight. The deal was never good to begin with, but at least he got paid.

Pretty ****** for the employees if you ask me.

 

[markyr17]

Apple is a bully and arrogant. They're like the guy yelling at the gate agent at an airport, "Do you know who I am?!"
Like businesses should kiss their feet because it's a big contract.

What??

GT signed a BUSINESS contract with Apple. Apple has no obligation or "moral" reason not to hold them to their agreement. How is Apple being a bully? They loaned GT half a billion dollars, and since this story broke, Apple has said that at this time, they are not looking for the repayment of their loan. So where does "bully" and "arrogant" come in?

 

[DeadSeaMac]

Apple is a bully and arrogant. They're like the guy yelling at the gate agent at an airport, "Do you know who I am?!"
Like businesses should kiss their feet because it's a big contract.

Apple had their patented iGun pointed at the head of GTAT's CEO as he signed off on the contract and took the big bag of cash from the Playground Bully

 

[scbn]

I can understand the part that the contracts are oppressive, because Apple has no obligations to buy their sapphire if they don't think it's good enough or meet their deadlines, but GT has not right to sell the sapphire to someone else.

Signing such a contract was a big gamble to begin with, now they regret it and blame all their misery on Apple.

 

[agsystems]

Didn't they agree for these terms when they signed up to get half a billion dollars from Apple? They are just using bankruptcy to get away from keeping their part of the deal. It's could be a setback for bringing back hi tech manufacturing to US.

I am thinking this is the strategy they need to use with the judge - if they are not in deep ****** - then why file for bankruptcy in the first place.

Sounds like they need to get out the contract to be able to survive - will see.