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You are here: MacNN Forums > News > Tech News > GT filings call Apple contract terms 'oppressive and burdensome'

GT filings call Apple contract terms 'oppressive and burdensome'
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NewsPoster
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Oct 10, 2014, 03:00 PM
 
Filings submitted today by sapphire supplier GT Advanced call for the court to nullify its contracts with Apple. "As discussed in detail in the Supplemental First Day Declaration, the agreements imposed oppressive and burdensome terms and obligations on GTAT," the company writes in one motion. "The contracts and leases...provide no benefit to GTAT's estates, and GTAT's continued performance under the Agreements is no longer a viable business option. GTAT has determined that the Agreements are no longer necessary for GTAT's business operations. The Agreements also are not a source of potential value for GTAT's future operations, creditors, or interest holders and constitute an unnecessary drain on GTAT's resources."

The company says it should be able to pursue further claims against Apple, but is unable to do so at this stage of Chapter 11 bankruptcy proceedings. It's therefore asking the court to void agreements while leaving intact the right to pursue claims later.

In a second filing, GT addresses the prospect of winding down its sapphire production facilities, and some of the logistics of doing so. The company argues that because the sapphire boules currently in its furnaces are valued at about $20,000 apiece, and take about 30 days to produce, it's in the interests of both GT and its creditors to allow them to be finished instead of halting operations immediately.

The company's proposed "wind down process" involves keeping a crew of 75 workers in action to monitor the sapphire, then remove the boules and prepare them for sale sometime after mid-November. A second stage would demand 15 people to clean and decommission furnaces to retain their value; finally, 35 workers would be tasked with shutting down the Mesa, Arizona factory entirely by December 31st. GT estimates that in all, about 890 people will lose their jobs; it is however asking for $65,000 in incentives to keep some staff onboard during the wind-down.

Apple has yet to comment. It's unlikely to be happy however, as it technically owns the real estate and the factory in Mesa, even though GT operates it. It will also have to search for an alternate supply of sapphire, critical for products like the iPhone and Apple Watch.

GT Advanced Technologies Request to Void Apple Agreements

( Last edited by NewsPoster; Oct 10, 2014 at 04:17 PM. )
     
OldMacGeek
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Oct 10, 2014, 03:10 PM
 
Well it's a good thing GTAT didn't *sign* this "oppressive and burdensome" contract. Oh . . . wait . . .
     
climacs
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Oct 10, 2014, 03:34 PM
 
That excuse might work for people like you and me where on one side there's a big corporation with dozens of well-paid attorneys and on the other side is little ol' you... but this is two corporations, presumably on a much more equal footing... sympathy, zero. You could not live up to the terms of the contract you signed, GT. My question is, where is Apple going to get all this sapphire for the Apple Watch? Are they just going to take over the plant and try to figure out the issues themselves? That's kind of what Apple was trying to avoid by putting together this deal.
     
climacs
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Oct 10, 2014, 03:36 PM
 
I forgot to add... kind of surprised that AAPL has not taken a hit at all on this news. Apparently the market knows that Apple will get its sapphire for the watch, whether it is from GT or elsewhere.
     
OldMacGeek
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Oct 10, 2014, 04:41 PM
 
AAPL is taking a hit, along with the rest of the market today. Who knew that sanctions would trickle down?
     
Flying Meat
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Oct 10, 2014, 05:00 PM
 
"...pursue further claims against Apple..." For what? Acquiring property and building a plant for your incapable butts? Get a grip.
     
climacs
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Oct 10, 2014, 05:39 PM
 
@OldMacGeek: AAPL has not taken a hit. Yesterday (10/9), the DJIA tanked over 300 pts and AAPL actually went up a fraction of a percent. Today it more or less gave back that gain from an otherwise bleak yesterday.
     
gprovida
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Oct 10, 2014, 05:44 PM
 
I wonder if Apple will directly or through a 3rd party buy GT and see it move forward under new management. It certainly has the cash and if Sapphire is seen as a core technology, then ????
     
thinkman
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Oct 10, 2014, 07:44 PM
 
Sour grapes cannot be litigated against! Apple provided them with a deal that could have made them worth a fortune, but because they were inept, and unable to produce what they promised, particularly given the massive window that Apple allowed, they now want to bite the hand that fed them. Sympathy level registering ZERO. In fact Apple should sue their pathetic aϟϟes for failure to fulfill their part of the bargain. GT, you are headed down the tubes, and on the way have decided to blame the company that could have more than put the on the map. S'long losers!
     
DiabloConQueso
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Oct 11, 2014, 10:41 AM
 
Yep, it sounds like GT Advanced was uncomfortable with the terms of the contract, but signed it anyway because they had dollar signs in their eyes. Now that it didn't work out, they want to try and lay as much blame as possible on Apple and as little as possible on themselves.
     
   
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