Apple Is Waging An 'Unusual And Unprecedented' Battle To Keep Its Secrets In A $1.5 Billion Bankruptcy Case

Apple ceo tim cookKevork Djansezian/ Getty ImagesApple CEO Tim Cook. His company does not want you to know what’s happening in the GT bankruptcy case.

There is nothing more routine than a company bankruptcy filing in federal court. It happens every day.

But, there’s a unique bankruptcy filing happening right now.

A company called GT Advanced, which was supposed to supply Apple with screens for the iPhone is going bankrupt. Apple is battling to keep one part of the $US1.5 billion bankruptcy case a total secret.

Media companies are now fighting in court to undo Apple’s secrecy bid.

We reached out to Apple for comment but did not hear back.

The GT Advanced story is odd. GT Advanced sells supplies to make sapphire, which is a durable, scratch-resistant material. GT struck a deal with Apple to start making its own sapphire, which could be used for iPhone 6 screens. Weeks before Apple announced the iPhone 6, there were reports that Apple would be using sapphire screens from GT Advanced.

But Apple ended up not using GT’s glass in the iPhone 6. It turns out GT struggled to make the glass to Apple’s standards. And now GT — which has 1,100 employees and $US1.5 billion in assets, according to court papers seen by Business Insider — is out of business.

Another eye-opening aspect of the case is that Apple had a contract provision allowing it to fine GT $US50 million per incident if it leaked any information about its business. And two execs at GT sold stock before the company went bankrupt.

GT, unsurprisingly, is furious, and it wants to air its dirty laundry in public, according to the Financial Times:

Ahead of a court hearing on Wednesday in New Hampshire, GT’s lawyers are arguing that even more information about its relationship with Apple should be published, in the interests of creditors and shareholders.

In filings last week, the Arizona-based manufacturer called its supplier agreement with Apple “oppressive and burdensome”.

Apple has filed a motion in New Hampshire federal bankruptcy court opposing the bankruptcy petition of GT. Apple also wants its request to be considered in secret, Re/code notes.

The company traditionally dislikes leaks. Apple’s latest iPhone 6 release was plagued by leaks before the launch. One worker at Apple supplier Foxconn in China was detained for allegedly smuggling iPhone 6 parts out of the factory.

Apple was reportedly surprised that GT went bankrupt. The move came after Apple apparently didn’t make a payment to GT of $US139 million when the company failed to meet some technical requirements.

But Apple may lose its fight to keep the GT case under wraps: the Dow Jones Co., parent of the Wall Street Journal, and Bloomberg have successfully intervened in the case, and the judge will now hear arguments as to whether that secrecy will continue.

Here is what the WSJ is complaining about:

The whole thing is very strange. While bankruptcies are often contentious — after all, they involve people who are angry that they’re owed money, and people who are angry that they went out of business — they aren’t often secret. The broad purpose of bankruptcy court is to figure out what assets the company has left, and how they should be divided among the people who are owed money. Bankruptcies don’t generally concern themselves with the details of the proprietary technological knowledge of the out-of-business company. GT has described the bid to keep everything secret as “unusual (and perhaps unprecedented).

Because Apple and GT have so far made their filings under seal, it’s not clear what, exactly, Apple is afraid of.

Here is one clue. In its motion, Apple specifically mentions that it wants its contracts kept a secret:

It also may be worried about details of its research getting out:

NOW WATCH: Tech Insider videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at

Tagged In

apple iphone 6 sai-us