Apple withheld its final payment of $139 million it was due to make to GT Advanced, reports The Wall Street Journal, ahead of its decision to file for Chapter 11 bankruptcy. It’s not known why the company withheld the money, but it’s been speculated GT was not able to meet sapphire yield requirements outlined in its deal.
That deal involved Apple loaning GT Advanced a total of $578 million to help get a large sapphire factory in Arizona up and running. The two companies announced the partnership last fall, which many believed would result in the production of a large amount of sapphire display covers earmarked for Apple’s newest iPhone models.
Unsurprisingly, these rumors pumped up GT’s stock price and reputation for several months, but when Apple announced the iPhone 6 in September, without sapphire, the rejoicing came to a halt. GT Advanced had reportedly been burning through its cash—as much as $250 million in a single quarter—and had very little to show for it.
These issues, of course, culminated in the company’s announcement Monday that it would be filing for bankruptcy in an effort to reorganize its business. Shares of GT Advanced dropped some 90% on the news yesterday, and the situation grew even bleaker this morning with reports accusing GT CEO Tom Gutierrez of insider trading.
It’ll be interesting to see how things play out from here—will Apple cut its losses and move on, or does it still have plans to use large amounts of sapphire in future products (the Apple Watch will utilize a small sapphire screen)? GT Advanced’s first bankruptcy court hearing is scheduled to take place on October 9 in New Hampshire.