Contact Us Today for Your Free Consultation!
 In Bankruptcy In The News, Blog

GT Files for Chapter 11 Bankruptcy

Many companies, including Apple, were surprised when GT Advanced Technologies filed for bankruptcy in early October. Right before filing, GT made a bond payment and promised a business update. In August, the company expected to end the year with $400 million.

GT filed for Chapter 11 bankruptcy, noting that a series of interactions with a key customer led to a severe liquidity crisis. The company has $89 million in cash and is seeking debtor-in-possession financing. This financing means that the company is allowed to continue operations in the best interest of any creditors but is required to seek court approval for any extra business activities.

The two big surprises in the bankruptcy filing were:

The company’s stock did not fall as low as would have been expected, and
The company made a schedule bond repayment before filing.
Since Apple was a huge partner of GT Advanced Technologies, it was expected that Apple would use GT products on their new iPhones. Not only did the partnership on these new products not happen, Apple refused to pay a $139 million repayment loan promised if GT reached technical milestones.

Apple said they were surprised by the bankruptcy filing since they were working with GT to help them overcome their technical hurdles and qualify for the loan.

Details of the Partnership with Apple

Apple and GT began working together in November 2013 in order to create the world’s largest synthetic sapphire factory. Apple purchased a warehouse in Arizona for $113 million and leased the facility to GT. Apple also lent the company $578 million to install the furnaces necessary to create the synthetic sapphire. GT would begin repayment in 2015.

Part of the stipulation of the loan was for GT to meet technical milestones before they were able to access more loan money. The company said they would meet the milestone for the final payment by the end of October.

Apple wanted to use synthetic sapphire as a way to solve the common problem of broken and scratched smartphone screens. GT was meant to produce enough sapphire to meet Apple’s demand, but the material produced performed poorly in testing.

bad credit score