Wall Street Journal, shareholders seek full release of GTAT bankruptcy explanation
But company, Apple seek to keep papers sealed
Even though GT Advanced Technologies has provided a revised version explaining why it went bankrupt, various stakeholders are arguing in court documents that the court should release – or at least preserve – the original explanation, citing the public’s right to know and the possibility it could be used as evidence of possible securities law violations.
The Merrimack-based company wants the original explanation of what went wrong with the $578 million deal it had with tech giant Apple to remain under seal and later expunged from the record. That’s because the document’s destruction is essential to a new deal with Apple that would enable GTAT to emerge from Chapter 11 bankruptcy.
Under that agreement, Apple and GTAT would be able to hold on to the original version but could not release it except under a court order.
Attorneys for Dow Jones, the parent company of The Wall Street Journal, called such a move “brazen” and “unprecedented,” arguing that such an arrangement is a violation of constitutional principles of public access.
Dow Jones is seeking the release of both the original version of as well as the transcript of a secret hearing that kept the motion under seal.
The federal bankruptcy court scheduled a hearing on Dow’s motion for Thursday, which is one day short of the one-year anniversary of GTAT’s ill-fated contract with Apple.
The New Hampshire Attorney General’s office weighed in as well, arguing that the state has an interest in protecting creditors, investors and the 259 workers employed by GTAT in New Hampshire. In addition, the AG said, the records should not be expunged from the record.
Meanwhile, lawyers for three investors holding some 824,000 shares have filed a “placeholder” motion, while a much larger group of 35 shareholders holding more than 2.55 million shares are seeking to form an equity committee on behalf of all shareholders who are opposed to destruction of any documents.
Finally, the General Employees’ Retirement System of Pontiac, Mich., an advocate of shareholder rights, noted that nine securities fraud lawsuits have been filed in federal district court in Concord. Expunging the bankruptcy court record would be tantamount to destroying evidence, the retirement fund reasoned
But the official creditors committee disagreed. The deal with Apple would enable GTAT to survive, it argued, maximizing value for creditors as well as preserving at least some of the company’s jobs.
Besides, it said, the details of much of GTAT’s earlier deal with Apple have been released as has a rewritten version explaining what went wrong.
“These are the public interests that are at stake and that Dow Jones would seemingly be ignoring by continuing to litigate to lift the seal … [for] its own economic interest,” the creditors committee attorney argued.
Apple itself – ever protective of the company’s confidentiality – went a little further. It said it wants to seal its motion about why portions of the record should be sealed in the first place.
Finally, GTAT itself emphasized that what it is seeking at this point is to keep the seal in place before its new deal with Apple is approved, perhaps by Thanksgiving. After that, the court could decide about destroying the documents.
By releasing the documents at this juncture would “risk losing the Settlement Agreement without ever having had the opportunity to demonstrate to the Court the benefits that the settlement offers to GTAT and its estates,” GTAT’s attorneys wrote.