According to a new report, creditors of GT Advanced Technologies complained in a bankruptcy court filing that the sapphire company may have gotten too little in its proposed settlement with Apple over legal claims stemming from a deal to supply sapphire screens. GT Advanced Technologies CEO had said in court papers that the iPhone maker pulled a "bait and switch" to force the sapphire maker into a money-losing deal in 2013.
Holders of GTAT'S notes, including Aristeia Capital and an affiliate of Wolverine Asset Management, said in court papers the "extraordinary allegations against Apple ... call into question the adequacy of the settlement agreement."
The noteholders cited allegations that Apple breached its contract and acted unfairly as GT Advanced's lender. The noteholders also said Apple's claims on GT Advanced's equipment may be unsecured. This would put Apple among the last creditors to be paid, not the first as Apple's deal anticipates.
The noteholders said they want access to internal records and documents from Apple and GT Advanced to investigate if the settlement lets Apple off too cheaply. The noteholders asked Boroff to postpone the settlement hearing, currently scheduled for Nov. 25, to give them time to complete their investigation.
The Reuters report noted that "Apple has denied GT Advanced's allegations. In court filings, Apple has called the accusations 'scandalous and defamatory' and "intended to vilify Apple and portray Apple as a coercive bully."
We previously reported that Bloomberg had realistically pointed the finger at GTAT for their giant flip-flop statements telling shareholders a positive story while things were falling apart in the background and at least one executive was selling their stock. That's why the SEC is investigating the matter.