By Tom Hals and Tanya Agrawal
(Reuters) - Apple Inc
The company, which had been slated to provide Apple with scratch-resistant sapphire for future mobile devices, told the court it was barred from disclosures because it was "tied up in knots" by a confidentiality agreement.
At the first public hearing since GT's unexpected Monday bankruptcy filing, a lawyer for the company said the agreement also prevented it from revealing its Chapter-11 gameplan.
GT Advanced forged a deal last year with Apple that involved outfitting an Arizona factory to make sapphire exclusively for the iPhone maker. Apple, which zealously guards the secrecy of its product pipeline, has been known in general to place strict confidentiality requirements on its many suppliers.
Thursday's request underscores the highly unusual nature of the case, starting with GT?s bankruptcy filing, which caught everyone from Wall Street investors to Apple itself off guard.
Luc Despins of Paul Hastings told U.S. Bankruptcy Judge Henry Boroff an unspecified confidentiality agreement prevented GT from disclosing cause of its bankruptcy, or its plan for dealing with the bankruptcy. He also acknowledged the 90 percent drop in the company?s stock price in the first three trading days of this week.
?I want to convey to all shareholders and creditors that the company feels terrible about that loss of value and will work everyday to recover that value,? he said.
?That?s an aspirational statement, not a guarantee.?
A lawyer from the Office of the U.S. Trustee, a bankruptcy watchdog in the Department of Justice, criticized the lack of disclosure by GT.
?The record is insufficient for the court to find what the court needs to find.?
On Thursday, shares of GT Advanced were up 10 percent at $1.21 on Nasdaq.
CAUGHT UNAWARES
GT Advanced had promised on Monday to fill in the blanks on a bankruptcy filing that offered scant explanation as to what prompted a move that wiped out around 90 percent of the solar and sapphire supplier's market value.
Industry insiders and Wall Street analysts have been left to speculate. Their musings centered on GT's half-billion dollar deal with the iPhone maker, under which Apple will help bankroll a manufacturing plant in Mesa, Arizona, on the condition that GT hit certain operational targets.
Under terms of the deal, Apple said it would provide a total prepayment of about $578 million to help install furnaces and other gear in the factory, which would be owned by Apple and slated to employ more than 700. Apple would then be paid back over five years starting 2015.
Apple said on Wednesday that it was surprised with the bankruptcy filing and that it was working with Arizona officials on its next moves.
Earlier on Thursday, GT Advanced had asked the bankruptcy court to keep under seal a separate request for the court to keep private some key documents relating to a third party. It said this would allow it to avoid paying damages under confidentiality agreements.
But it did not disclose the identity of the third party nor the nature of the potential contract violations.
And in the filing with a U.S. bankruptcy court in New Hampshire, the company also asked that the hearing to deal with this request be held "in camera," or closed to the public.
GT Advanced said it was compelled to make the request to avoid the risk of paying damages of $50 million per violation.
"GTAT recognizes the unusual (and perhaps unprecedented) nature of the request made in this Motion," the company said in the filing.
The case is In re: GT Advanced Technologies Inc, U.S. Bankruptcy Court, District of New Hampshire, No: 14-11916.
(Editing by Edwin Chan, Ted Kerr, Robin Paxton and W Simon)
