GT Advanced Technologies (GT) filed for Chapter 11 bankruptcy protection on Monday, a move that would give the sapphire producer and Apple supplier a chance to reorganize its finances and debt. GT's move may be surprising to some, considering the US$578 million deal the company inked with Apple, and it's proof that being an Apple supplier isn't an easy job.

A Raw Sapphire Boule

GT first came to light to Apple watchers when the company announced a deal with Apple in November of 2013. Under the deal, GT would build a sapphire production facility with more than a thousand furnaces in a manufacturing plant owned and operated by Apple in Mesa, Arizona.

At that time, it was speculated that Apple would use the sapphire for iPhone 6 screens, replacing Corning's Gorilla Glass. That speculation turned into a series of rumors and leaks that gained steam throughout the first half of 2014, only to reverse course in the summer. And, of course, Apple released the iPhone 6 with "ionized glass" that may or may not still be Gorilla Glass, putting the final kibosh on the whole idea.

At the same time, Apple is using sapphire for lens covers on both its Touch ID sensors and lens covers on iPhone 5s and 6. The company is also using Sapphire on at least two Apple Watch models (Watch and Watch Edition).

But, here's GT seeking bankruptcy protection, which raises so very many questions. Let's start with Apple's involvement with the company. Landing a gig to make components or build stuff for Apple can be a life-changing experience for most companies. It can also be a nightmare.

That's because Apple leverages it's massive cash hoard and huge orders to extract the very best terms that it can. Those terms often leave companies unpaid for many months, borrowing money to pay their corporate bills while they wait, and operating on razor thin margins the whole time. Apple also has incredibly exacting specifications that can leave companies on the hook for any problems.

Some Terms Are Terminal

With a company like GT Advanced Technologies, its terms with Apple could be directly responsible for needing bankruptcy protection.

For instance, some excellent reporting from Mark Gurman at 9to5Mac uncovered "aggressive" plans for the Arizona facility that was thought to produce enough sapphire for 100-200 million iPhone covers. As noted above, the iPhone 6 didn't use sapphire in that manner. In what could be a related story, GT is reportedly sitting on its very own hoard of sapphire material, a hoard that cost money to produce.

Now, imagine this scenario: GT produces a lot of sapphire material for Apple; its terms with Apple dictate that Apple doesn't pay until sometime after Apple accepts delivery; those terms also allow Apple to choose when it accepts delivery; Apple's plans—say, for the Apple Watch—change due to software or some reason unrelated to sapphire; those terms also specify that GT cannot sell the material to anyone else.

That's a recipe for bankruptcy if ever there was one, and it's not only in the realm of possibility, I believe it is in the realm of likelihood.

These are the risks that go along with supplying the most profitable company on the planet. The flip side is the potential for large profits and dealing with a company that itself is not likely to go under.

Lastly, there are many more unanswered questions. Did Apple know this was coming? It seems likely, but we don't know. Could Apple have prevented it? Well, duh. Apple could have bought GT Advanced Technologies with money shaken out of the couches in the executive lounge at 1 Infinite Loop. Considering that $GTAT lost over 90 percent of its value on Monday, Apple could buy the company with Tim Cook's walking around money.

Will GT emerge from bankruptcy protection? This also seems likely. Will the company still be an Apple supplier? That's much trickier. It's distinctly possible that GT is using bankruptcy to get out from under its obligations to Apple. If that's the case, things could get ugly, or what the lawyers consider just another day.

$GTAT ended the day at $0.80 per share, down $10.25 (-92.76 percent), on 18 times normal volume.

$AAPL ended the day unchanged, at $99.62 per share on light volume of 36.8 million shares trading hands.