GT Advanced Technologies wants to pay out US$6 million dollars in bonuses to company executives, which likely won't sit well with creditors hoping to recoup their money. GTAT filed for chapter 11 bankruptcy protection after its finances spun out of control from a failed deal to produce synthetic sapphire glass for Apple.
GTAT wants to give executives bonuses to keep them from leaving
GTAT is asking the court to let it give executives bonuses as a way to retain them during bankruptcy proceedings because its stock value is far too low to use as an enticement. Considering its creditors want every penny they can get, it's a safe bet they'll protest the request.
Apple and GTAT struck a deal about a year ago where the company agreed to produce sapphire glass for the new iPhone model display surface. As part of the deal, Apple leased factory space to the company and fronted it over US$430 million to finance the special furnaces it needed for the project.
Most of the glass GTAT produced was too flawed for Apple's needs, and the company suffered from mismanagement. That led to spiraling costs and ultimately a chapter 11 bankruptcy filing just as Apple was unveiling the iPhone 6 and iPhone 6 Plus—without sapphire glass displays.
GTAT's stock plummeted and the company fired over 800 employees, and it's in the process of selling off equipment to pay back debt to Apple and other creditors. Now it looks like the company's senior staff is ready to bail, and the bonuses will be a way to retain critical employees.
GTAT is planning on staying in business after it completes its bankruptcy proceedings, which no doubt is playing into its efforts to retain executives. The company's creditors, however, may not be so optimistic, and will more likely be interested in getting the the money they're owed instead of seeing it go to GTAT's leadership.
[Thanks to Valuewalk for the heads up]