GT asks court if it can close Mesa factory; company considers suing Apple

GT asks court if it can close Mesa factory; company considers suing Apple
In the aftermath of GT's surprising bankruptcy filing last week, the company is seeking permission from the bankruptcy court to close the factory in Mesa, Arizona. This was the facility that was owned by Apple, and was outfitted with machines to produce the sapphire glass that Apple was going to use for displays on the Apple iPhone 6 and Apple iPhone 6 Plus.

Apple had agreed to prepay GT $578 million to help the company equip the factory with the necessary machinery. Earlier this week, it was disclosed that Apple had paid GT $440 million. While some questioned whether Apple had put GT in bankruptcy by not paying it the full amount, it turns out that Apple had been working with its partner to overcome certain issues that prevented GT from reaching certain milestones. Under the terms of the contract between both companies, Apple was going to pay GT the remaining $138 million if certain goals were met.

Due to low yields from the finishers, Apple decided not to use the sapphire glass for its new models, opting to go with its hardened-ion glass. Apple did use the sapphire already produced, for the Apple Watch. Meanwhile, Apple still employs sapphire on its Touch ID fingerprint scanner and the rear-facing iSight camera on the iPhone. While the manufacturer was hoping to launch the Apple Watch in February, we could see further delays as Apple seeks a new partner to supply it with the material.

Bankruptcy Judge Henry Boroff will hold a hearing on GT's motion to close the plant, on October 15th. The hearing will take place in Springfield, Mass. Under Chapter 11, a company is allowed to continue operating while it is protected from its debt. The Mesa facility has 890 workers, and is losing $1 million a day.

GT could decide to take Apple to court as the company blames the tech titan for its problems. "GT believes that it has many claims against Apple arising out of its business relationship with Apple," reads GT's filing with the bankruptcy court.

Thanks for the tip!

source: Recode

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15 Comments

1. reyenrique

Posts: 99; Member since: Oct 07, 2012

that the way it go

7. engineer-1701d unregistered

I feel sorry for all the petiole Losing there jobs because of apple. I say sue them for the lose of the company income people's lively hood and with low out come from sapphire is same as the month wait for the ion plus iPhone

9. anirudhshirsat97

Posts: 408; Member since: May 24, 2011

How is this Apple's fault? Seriously...?!

10. Philipand96

Posts: 103; Member since: Jul 12, 2014

The thing is VERTU already uses Sapphire glass on some of its phone. The problem is NOT Sapphire Glass itself, it is the expense. It is OK for Vertu as their phones "Ain't Cheap" so there Vertu phones cost typically $5000 plus Corning Gorilla glass is $3 THREE DOLLARS per phone Sapphire Glass is $30 THIRTY DOLLARS per phone So Vertu can either passes on the extra $27 to is customer or take a $27 hit per phone which isn’t going to affect profits My take is this is "show only” if Vertu luxury and all that uses Sapphire Etc Apple premium (PRICE ONLY) devices jumped on the bandwagon The problem was NOT Sapphire Glass itself but Apple wanted a "cheaper version" of Sapphire Glass! GT produced this version on Sapphire Glass (sapphire glass "lite") which is then sent to the finishers. Each piece of Sapphire Glass has to be added to the display manually in a ‘isolation’ room ensuring no dust or any other matter get trapped This is the low yield reported. Afaik NOT a production problem, but may be in part using a cut down version of what Vertu adds to its phone But prior to the display added the sapphire glass must be joined to the display and done manually A higher yield would have resulted if the standard process had been followed Vertu managed to do it I note that Apple did NOT go back to Gorilla Glass using shatterproof glass instead. This is all to protect the profit marginhttp://www.phonearena.com/news/Did-you-know-that-some-phones-already-use-a-sapphire-screen_id58067

14. bob_monkeywarts unregistered

Apple didn't pay GT the 138 million bucks.

2. Napalm_3nema

Posts: 2236; Member since: Jun 14, 2013

Macworld is saying it is actually GG on the iPhone. Regardless, GT didn't meet its milestones, they don't get paid. Maybe the CEO should have thought about that while he was liquidating $10 million dollars in company stock while the price was high. Homeboy knew they were dead in the water, and I'm sure the SEC will be paying him a visit very soon.

3. Martin_Cooper

Posts: 1774; Member since: Jul 30, 2013

So basically Apple gave them half billion to help the stand up on feet and produce their future watch glasses, instead they f**k it up and go bankrupt and blame apple for helping them? HILARIOUS

4. Chaseism

Posts: 82; Member since: May 08, 2013

It's been pretty interesting following this story. At first, everyone blamed Apple for GT's demise. But it looked like even after GT didn't meet expectations, Apple advanced the company another payment, even though they had no obligation to do so and GT still didn't deliver. We'll see how this one turns out...

5. 0xFFFF

Posts: 3806; Member since: Apr 16, 2014

GT certainly thinks that the contract they signed with Apple was, in fact, a lemon of a deal: 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. https://www.scribd.com/doc/242546436/GT-Advanced-Technologies-Request-to-Void-Apple-Agreements

6. Napalm_3nema

Posts: 2236; Member since: Jun 14, 2013

They will probably get to terminate them in bankruptcy court, but they have zero basis for an actual lawsuit against Apple. It's pretty hopeful that decades of contract law would be voided to make this happen.

8. xeonfire

Posts: 93; Member since: Feb 15, 2014

I smell insider dealing...if GT CEO is confident of the Apple's deal, he would not have so quickly in disposing of the company's shares, he was selling his remianing shares days before the announcement of the bankruptcy...dirty rat!

11. fzacek

Posts: 2486; Member since: Jan 26, 2014

Apple cheating people as always...

12. Taters

Posts: 6474; Member since: Jan 28, 2013

Hey, if Apple can get 1 billion off of Samsung with nothing except prior art and round corners. GT can sue Apple easily, they have a lot more than that.

13. darkkjedii

Posts: 30833; Member since: Feb 05, 2011

It was way more than rounded corners that got Sammy nailed. Stop it with the stupid fanboyism, and do your research. Face it, Sammy copied Apple, and life goes on.

15. Taters

Posts: 6474; Member since: Jan 28, 2013

More like a lot less than rounded corners. Baseless accusation after baseless accusations don't add up to a non baseless accusation. Maybe in the USA.

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