Documents in GTAT's bankruptcy filing will go public next week, despite requests to keep them sealed
COO Daniel Squiller's sealed statement reportedly includes details Apple feels will harm its reputation and relationship with other parts suppliers, according to the Wall Street Journal.
Judge Henry Boroff said, “I simply do not think [the statements] are sufficiently egregious that they are unusually prejudicial to Apple.” He added that Mr. Squiller's statements don't meet the requirements for protecting Apple from defamation in bankruptcy court.
GTAT signed a deal with Apple a year ago to provide synthetic sapphire glass to Apple for the Apple Watch along with the iPhone 6 and iPhone 6 Plus. The company wasn't able to follow through on its commitment, leading to spiraling expenses, missed deadlines, and ultimately bankruptcy.
Apple had agreed to front US$578 million in a series of payments so GTAT could ramp up its sapphire production, and bought and leased factory space to the company, too. When GTAT failed to meet key milestone goals, Apple delayed and then ultimately withheld payments. Without that money, GTAT wasn't able to make ends meet.
GTAT characterized Apple's terms as “oppressive and burdensome,” calling into question exactly why the company would agree to the deal in the first place. After its chapter 11 bankruptcy filing, GTAT said it planned to shut down its sapphire glass production facility and started laying off 727 employees.
Court filings from the company say it had an “amicable parting of ways” with Apple as part of a post-bankruptcy agreement. Terms of that agreement aren't public, and now it's likely that deal will fall apart.
GTAT attorney Luc Despins argued that the edited version of Mr. Squiller's already published affidavit was sufficient, and that the complete version should stay under seal. Releasing Mr. Squiller's complete testimony will throw the company's settlement with Apple into jeopardy because the iPhone and iPad maker could walk away from the deal.
Unsealing the document sounds like a bad deal all the way around for GTAT and its creditors because without Apple on board, anyone hoping to recover any money from the company is essentially out of luck. Despite those concerns, Dow Jones, New Hampshire's Attorney General's office, and others have pushed for more transparency in the case.
With the official order to unseal Mr. Squiller's testimony coming next week, Apple is facing potentially embarrassing revelations, and GTAT is facing its slim hope for a good outcome vanishing before its eyes.