SAN FRANCISCO (Reuters) - GT Advanced Technology Inc GTATQ.PK, which struck an agreement with erstwhile partner Apple Inc (AAPL.O) last week that allowed it to proceed with its bankruptcy, said the iPhone maker had threatened to seek damages of more than $1 billion against the company.
Former stock market darling GT Advanced, once set to become the main supplier of scratch-resistant sapphire to Apple, surprised markets when it filed for Chapter 11 earlier this month. It failed to meet performance targets set out in its supply agreement with Apple, setting the stage for its failure, according to court filings.
GT Advanced said in a court filing late on Monday that it needed to settle with the iPhone maker to avert a costly legal battle it might not win.
“The alternative to the settlement agreement would be months, if not years, of costly, time-consuming, and distracting litigation with Apple over a wide range of contested
issues, the success of which GTAT could not guarantee,” the company said in a court filing late on Monday.
“Apple has advised GTAT that it would assert liquidated damages claims for in excess of $1 billion against GTAT,” according to the filing. Liquidated damages are awarded when a party to a contract fails to perform as promised.
Apple, which has more than $100 billion in cash, was not immediately available for comment.
Reporting by San Francisco newsroom; Editing by Steve Orlofsky