At a hearing in the U.S. Bankruptcy Court in Massachusetts, presiding judge Henry Boroff told the lawyer representing Apple that he was having difficulty in assessing the proprietary information from the GT-filed bankruptcy documents which Apple wanted to remain under seal. GT Advanced said that it has to observe strict confidentiality requirements in their contracts with Apple. If these are violated, fines of up to $50 million would be incurred.
Apple entered an exclusive deal with GT Advanced in November which cited that the latter would put up a factory in Mesa, Arizona where it will produce scratch-resistant sapphire glass for Apple. However, the latest iPhone models didn't have GT Advanced's product. The company then filed for creditor protection but didn't actually disclose the reasons for the filing to avoid violating the confidentiality agreements made with Apple.
While Apple is known for running one of the world's most efficient supply chains, it is also known for outlining standards and pricing schemes that are usually less profitable to its suppliers.
Boroff noted that the two seemed to have made a complex series of agreements. He likened Apple to a demanding home owner that became unhappy with the way the project has turned out.
"I'm seeing what looks incredibly like a construction suit, where a homeowner says to the contractor, 'It didn't come out the way I wanted to,' and the contractor says, 'Well, it would have come out that way if you didn't continue to change the specifications,'" says Boroff. "I've got a foot-high stack of documents, and it can't be that it all must be sealed."
A bit of information had at least come out at the hearing on Wednesday. Luc Despins, a lawyer representing GT Advanced, said that the company will discontinue its sapphire production. Moreover, it will start sending layoff notices to employees that are under the Worker Adjustment and Retraining Notification (WARN) Act. The act is a U.S. labor law that seeks employers to provide advance notification of 60 calendar days to their employees that would be affected by plant closings and mass layoffs.
Regulators and creditors are clamoring for more transparency of the case. According to the bankruptcy watchdog of the U.S. Department of Justice, sealing the information on GT Advanced's bankruptcy filing would counter the objectives outlined in bankruptcy laws and would undermine the system's reputation on fair treatment of cases.
The hearing on GT Advanced's decision to shut down its operations in Massachusetts and Arizona was moved to Oct. 21 with the consent of the company, Apple and an official committee of unsecured creditors. The delay is to enable the committee to sign agreements on confidentiality and to study the case thoroughly. Apple has until Monday to come up with a list of the sections that could hurt the company, with each entry clearly indicated by page and line.
