In what has become the most discussed lawsuit to date, the GTAT-Apple fiasco had somewhat subdued after its recent hearing, when an agreement was reached between the two technology companies to settle the dispute without damaging either of the two companies any further.
The agreement reached stated that GTAT was to retain the ownership of all the 2,063 sapphire furnaces it had (which it had bought as part of the contract with Apple Inc. (NASDAQ:AAPL), in order to sell off each and every one of these furnaces within a year’s time. The proceeds from such sales were to be given to Apple, as part of the repayment of the $439 million prepayments Apple had given to GTAT to fulfill the contract. If this was done, it was decided that Apple would waive all other liabilities that GTAT might owe.
However, now that the agreement seems to be on the brink of extinction, things are looking terrible for GTAT. If the decision is left up to the court to decide, Apple will be demanding $1 billion in damages to be paid by GTAT, a sum the manufacturing company simply cannot afford.
Apple has been on GTAT’s head ever since the latter requested a judge to allow it to disclose confidential information regarding the contract signed between GTAT and Apple. Such a disclosure is disallowed under the agreement originally signed between GTAT and Apple, with a fine of up to $50 million per occurrence payable by GTAT in case of infringement.
GTAT’s bankruptcy filing, which still remains in an unopened state due to the confidentiality clause, holds many facts and figures which GTAT claims are proof that Apple became unreasonable with GTAT and caused GTAT to enter into a state of bankruptcy. According to Apple’s attorney, a lot of “name-calling” has been done in the bankruptcy filing, which is not factually accurate and simply aims to discredit the company in the eyes of the public.
However, GTAT stands firm in its position, stating the facts and figures presented in the bankruptcy filing is necessary information to proceed with the case. According to GTAT, Apple had put the company between a rock and a hard place, regardless of multiple requests by the company to cooperate and alleviate certain conditions, and drove the company to bankruptcy.
GTAT seems to get nothing out of defaming Apple, except for a strong case in front of the judges. If the case goes in favor of GTA, Apple Inc.’s (NASDAQ:AAPL) image will remain intact in the eyes of the general population, as well as investors. The entire backlash will be on GTAT itself.
GTAT shares have plummeted after its bankruptcy filing to $0.61 as of Friday. Share value remains between $0.31 and $2.00, fluctuating according to news regarding GTAT’s progress in its dispute with Apple. However, share value may drop to $0.00 in the coming few days, if the recent deal signed between GTAT and Apple is dissolved due to disclosure of confidential information, as Apple will then be asking GTAT for $1 billion in damages.
