In the aftermath of GT Advanced filing for Chapter 11 bankruptcy protection, the sapphire maker reached a $439 million settlement with Apple in which the supplier will repay the iPhone maker up to $290,000 per furnace sold. GT Advanced creditors aren’t happy with the proposed settlement, however, arguing that the sapphire company may have received too little in the deal.
Reuters reports that “holders of GT Advanced’s notes, including Aristeia Capital and an affiliate of Wolverine Asset Management, said in court papers that the ‘extraordinary allegations against Apple … call into question the adequacy of the settlement agreement.‘”
The settlement still needs to be approved by U.S. Bankruptcy Court Judge Henry Boroff, who has been presiding over the Chapter 11 bankruptcy case in a Springfield, Massachusetts court.
The Wall Street Journal reported last month that Apple’s deal with GT Advanced fell apart over the supplier’s inability to provide iPhone 6 displays. In the months leading up to the iPhone 6 launch, it was widely speculated that the smartphone would have an ultra-durable sapphire crystal glass display, although the rumors failed to materialize.
GT Advanced later claimed in court documents that Apple used a “bait-and-switch strategy” and said to “put on your big boy pants and accept the agreement,” an account that Apple lawyers described with words such as “inflammatory,” “untrue” and “slanderous” in response. Apple and GT Advanced reached a clean break in late October.
A settlement hearing is scheduled for November 25th, although creditors have attempted to have that date pushed back as they push for access to internal records and documents from Apple to show if the settlement let the iPhone maker off too lightly. GT Advanced warned that a delayed agreement could jeopardize its ability to reorganize and repay its creditors.
In related news, Bloomberg reported on Tuesday that Apple has maintained its commitment to repurpose GT Advanced’s Mesa, Arizona-based factory that housed several furnaces for producing sapphire crystal glass. Apple is focused on creating or maintaining as many jobs as possible in Mesa, in light of news that GT Advanced is laying off 700 employees by December 15th.
“They’ve indicated their commitment to us: They want to repurpose that building and use it again,” Mesa City Manager Christopher Brady said in a recent interview. Apple has said it’s focused “on preserving jobs in Arizona” and promised to “work with state and local officials as we consider our next steps.”
Apple has highlighted bringing more manufacturing jobs back to the United States, whereas traditionally it relies heavily on Chinese companies like Foxconn and Taiwanese Semiconductor Manufacturing Company (TSMC) to create its iPhones, iPads, Macs and other products. During a Senate hearing last year, Apple CEO Tim Cook said “We’re using our earnings growth to invest billions of dollars in the U.S. to create even more American jobs.”
Mesa, a suburb of Phoenix with a population of around 450,000 people, is pleased about the pledge.
“Apple could’ve invested in a facility literally anywhere in the world,” said Mesa Mayor John Giles, who is planning to visit Apple’s headquarters in Cupertino, California, to show the city’s support. “There’s a reason they came here, and none of those reasons have changed.”
Apple and GT declined to comment.
Update: Bloomberg reports that Boroff has officially postponed the November 25th settlement hearing until December 10th.