GTAT’s request came at a time when hundreds of its employees have lost their jobs
The U.S. bankruptcy trustee has opposed GT Advanced Technologies Inc (OTCMKTS:GTATQ)’s proposal to pay its top executives millions of dollars in bonuses. Last month, the Merrimack-based company had sought court approval for executive bonuses, saying that it needed to retain senior executives during the crucial restructuring phase. GT Advanced’s Mesa, Arizona plant was shut down after the company failed to provide high-quality sapphire glass to Apple.
Why pay bonuses to those who led you to bankruptcy?
The U.S. trustee argued that the company’s request came at a time when hundreds of its employees had lost their jobs. GTAT’s equity holders are still wondering whether they would receive any return on their investments after the company’s failed venture with Apple. William Harrington wrote in a motion that GT Advanced has admitted that its bankruptcy resulted from its decision to pursue the Apple relationship. And that decision was devised and pursued by the same executives whom it wants to pay millions of dollars in bonuses.
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GT Advanced had proposed three programs to pay out close to $6 million in bonuses to top executives. After the trustee’s motion, the company argued that the bonuses would be paid only after GTAT met its various goals to turn around its business. Since filing for Chapter 11 bankruptcy in October, 2014, GT Advanced has lost close to $100 million, reports New Hampshire Business Review.
Court denies GT Advanced equity holders role in bankruptcy
GT Advanced shareholders led by T. Richard Faloh had requested to have a voice in the company’s bankruptcy. But Judge Henry Benoff has denied the request, though there is still a possibility for the group to come back with a new proposal. Shareholders were demanding an official role in the bankruptcy case because they believe GTAT’s business is worth enough to leave a payout for them.
To form an official committee of equity holders, they must prove that there is enough money for them after all the debts have been paid off, and that any other factions are not representing their interests. GT Advanced said that shareholders did not meet these criteria. Last month, GT Advanced reached a settlement with Apple. Under the terms of the settlement, GTAT has four years to sell off its 2,000 furnaces at the Arizona facility and pay down $439 million in Apple debt.