Apple, GTAT Agree On A New Accord To Settle $439 Million Debt

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Apple and its failed sapphire glass supplier GT Advanced Technologies have finally reached an agreement to settle the bankrupt company’s $439 million outstanding debt. GTAT now intends to auction the equipment it acquired during the build-out of operations connected with the defunct partnership, according to the documents it filed with the U.S. Bankruptcy Court in New Hampshire on Monday.

Apple and GTAT finally settle

Under the previous ‘wind down’ plan, GTAT was required to sell more than 2,000 sapphire furnaces, with cash proceedings directed towards its debt. However, the company could not meet the assigned goal, and its failure led to the latest auction scheme.

As a part of the arrangement, GTAT will retain up to 600 furnaces while Apple will take over the unsold items, says a report from the Wall Street Journal. A year earlier, GTAT filed for Chapter 11 bankruptcy protection, which it claims to be a ‘classic bait-and switch’ heavily in Apple’s favor. Apple said that GTAT failed at delivering a sufficient number of quality sapphire boules, and this led to the collapse of the partnership.

According to the court documents, GTAT is required to auction off its remaining furnaces by November 23 before the equipment move-out deadline on December 31. Before the two companies move forward, they are required to wait for final approval from the bankruptcy judge.

Sad end to a bright start

In November 2013, the first reports of a partnership between Apple and GTAT surfaced, and later the details were aired in the bankruptcy court. GTAT invested $900 million on setting up an advanced sapphire production facility in Mesa, Arizona, while Apple made an advance payment of $439 million. Apple wants to recover its initial layout as the partnership is dissolved.

GTAT was tasked to make sapphire displays for the iPhone 6 and the iPhone 6s Plus. Unfortunately, GTAT could not produce sapphire glass that met Apple’s standards, and hence the partnership had to be called off. In October 2014, GTAT filed for bankruptcy, and laid-off more than 700 employees, and also shut down the factory in Mesa. Apple is repurposing this factory as a data center.

GTAT, based in New Hampshire, manufactures optical, laser and solar equipment, and it struggled over the past year to sell the furnaces, and its efforts come to an end with this proposed settlement. The company would have been transformed into a major player because of its connection with Apple, but now it is just trying to survive.

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