Reuters reports that GT Advanced Technologies (NASDAQ: GTAT)  is asking the court to "keep crucial documents sealed," a move described as a "highly unusual situation."

GT reportedly alleges that it isn't able to reveal why it filed for bankruptcy because it wanted to "avoid the risk of paying damages of $50 million per violation." In this case, a violation seems to mean a violation of confidentiality agreements.

While it is true that paying such fines for violations would further weaken GT's financial position, I think that, at this point, investors have the right to know exactly why they so abruptly lost the money that they did.

What is bankruptcy?
According to Wikipedia, "When a business is unable to service its debt or pay its creditors, the business or its creditors can file with a federal bankruptcy court for protection under Chapter 7 or Chapter 11."

Chapter 7 bankruptcy essentially means that the business is finished and is liquidated, which means that the company's assets are given back to the entities to whom the business owes money. Chapter 11 bankruptcy, on the other hand, is designed to, according to NOLO, allow a bankrupt company to "restructure its financial affairs."

GT Advanced filed for Chapter 11 bankruptcy protection, which means that the bankruptcy court will have to determine how GT plans to run its business and how it's going to pay back all of the money that it owes.

This lack of transparency is uncomfortable
Before it declared bankruptcy, GT Advanced Technologies traded for a market capitalization of approximately $1.5 billion; the company is worth a mere $139 million as of writing.

That's about $1.3 billion in shareholder value gone.

While knowing why the company went bankrupt isn't going to get shareholders their money back, I do think that stockholders would benefit from the peace of mind that comes with closure.

Do shareholders have a right to know?
I am not a legal expert, but it doesn't seem to me that GT has any legal obligation to tell stockholders what happened. However, the reason that investors, at least from the vantage point of somebody who did lose a fairly large chunk of change from this whole ordeal, is that there did not appear to be any overt signs that bankruptcy was pending.

Note that the company's management issued full-year revenue guidance of between $600-$700 million on its Aug. 5 earnings call. Further, as Fellow Fool Evan Niu points out in his must-read piece, management was not only confident that GT would "end the year with approximately $400 million of cash on the balance sheet," but that even if it didn't receive the final pre-payment from Apple, that it would not be a "world-ending event."

Now, while GT's Safe Harbor statement pretty explicitly stated that there was no guarantee that its deal with Apple would lead to actual revenue, it seems strange that there was such a short time between "we're on track for this revenue" to "we're bankrupt."

Foolish bottom line
At the end of the day, what's done is done, and the common stockholders in GT Advanced Technologies are likely to be wiped out (I'm frankly shocked that the stock is trading, as of writing, at $1.15). That said, I think it's only fair that shareholders know exactly why they lost the money that they did.

Indeed, while GT might owe Apple an additional $50 million for each violation of its confidentiality agreements, I really do have to wonder: What's the worst that could happen if an additional $50 million or so were tacked on to what the company owes? Bankruptcy?