GTAT creditors lay out their objections
Motions seek to hold off voiding Apple deal, prevent layoffs
Creditors, the state of New Hampshire, the bankruptcy trustee and even The Wall Street Journal, are furiously objecting – in anticipation of a showdown hearing Wednesday – against GT Advance Technologies’ various motions to either void its $578 million contracts with Apple to wind down its plant in Arizona, to lay off 80 percent of its 1,100 workers, or to keep the reasons behind its stunning Oct. 5 bankruptcy filing a secret.
The motions were filed while creditors met on Tuesday for the first time to try to organize a committee to represent them in bankruptcy proceedings. The meeting was held in a banquet center because the number of creditors was too numerous to fit into the bankruptcy courtroom in Manchester.
There are at least 5,000 creditors overall, about 700 of them in New Hampshire.
In the meantime, three class action suits have been filed against GTAT executives and board members alleging investors and noteholders were misled about the Merrimack-based firm‘s coming cash crisis and thus they were blindsided as the company’s stock price fell from more than $20 a share to 40 cents.
The company also disclosed in a filing that the Nasdaq stock exchange threatened to halt trading Wednesday morning unless GTAT files an appeal. The company said it intended to do so.
At issue is GTAT’s nearly year-old contract with Apple to supply the technology giant with sapphire to make screens for Apple’s mobile devices. The sapphire was to be produced at an Arizona facility leased from Apple.
GTAT has since denounced the contract as “burdensome and oppressive,” and is asking the bankruptcy court to reject it. But the firm said it can’t publicly disclose any details about the contract because of a possible $50 million-per-violation penalty contained in a confidentiality agreement.
Nearly all of the latest motions filed in bankruptcy court are asking the court to deny or at least delay rejecting any contract with Apple until details of the deal are made public.
Even GTAT has asked the court to order the deal’s disclosure, but Apple, weighing in for the first time, said it wanted the documents kept from the public.
“The bases for the objection involve confidential research, development, or commercial information regarding Apple’s business processes,” Apple claimed.
The bankruptcy trustee had another opinion.
“It is extraordinary for the debtors to ask this court to find that the rejection of these leases and contracts is in the interests of the estate at this time, before the complete leases or contracts are made available, before the debtors have demonstrated the financial harm to be suffered by the estate,” said one filing.
The state of New Hampshire also weighed in, noting that 259 of the GTAT’s 1,100 workers are employed in the Granite State. (GTAT has said that some of them might be affected by the layoffs, but did not disclose how much. The firm did not return NHBR phone calls on the matter.)
And The Wall Street Journal, which has been reporting on the GTAT bankruptcy, weighed in, though it had to ask the court permission to do so, since it is not a direct party to the proceedings.
The media organization argued that not only should redacted documents be released, but transcripts of a secret hearing about their disclosure should also be public, at least partially, because GTAT “failed to show the kind of compelling interest that would permit a restriction on public access under the First Amendment.”