|
|
| Gupta to get raise to $200,000; new CFO a temp at $105/hr, agency $45/hr |
 |
|
Wednesday, October 03 2007 @ 05:22 PM EDT
|
I'd say SCO may be off to a shaky start with the trustee in its bankruptcy. Their lawyer just told the court that he had assured the trustee that SCO needed money for lower-level accounting help, not for a CFO. Then SCO hired a new CFO, Ken Nielsen. Here's the 8K SEC filing which provides details about his background and also the financial arrangement. He's via CFO Solutions, "a provider of outsourced financial services" and CFO gets $45 per hour and Nielsen gets $105/hr. You can read the lawyer's words in this hearing transcript. SCO is nothing if not bold. Why, at this rate, adding in the amounts for all the lawyers and bankruptcy advisers, and the raise and bonus for Ryan Tibbitts, I'd say SCO has hit the ground running and should be able to efficiently run through all of Novell's converted monies in no time flat. Let's see: -
Ryan Tibbits raise from $160,000 per year to $210,000 = $50,000
-
Ryan Tibbits prepetition bonus = $50,000 net (with SCO caring for taxes)
-
New CFO if he works 40-hr week for a year (105+45/hr) = 312,000
-
New accountants = $20,000 (with more to be requested)
-
Prepetition bonuses under incentive plan = $30,000
-
Berger Silverman = $425,000
-
Dorsey & Whitney = $100,000
-
EPIQ - $25,000
- Mesirow Financial = $35,000
- Pachulsky Stang Ziehl and Jones = $75,000.
Then there's the new retirement policy and the new insurance. That has to be added in. They're paying utilities of course, because instead of doing a Chapter 7, they want to keep the lights on, so add that on, along with the prepetition wages and bonuses and incentives. Darl alone. Boies Schiller will want to be paid too. But even leaving all of that out, SCO's managed to spend, or projects to spend, a cool $1,122,000 right there. They only filed for Chapter 11 reorganization on September 14th. That's pretty impressive. Guys, we can do this. Just a little more effort, a little more creative thinking, keep the trustee lulled, and I believe SCO can ace Novell completely.
Joking, yes, but here's a bit from the 8k: Change in Directors or Principal Officers
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. Appointment of Ken R. Nielsen
On September 27, 2007, The SCO Group, Inc. (the "Company") appointed Mr. Ken R. Nielsen as its interim Chief Financial Officer, effective October 1, 2007....
The Company will compensate Mr. Nielsen at a rate of $105 per hour. Mr. Nielsen is working at the Company through CFO Solutions, a provider of outsourced financial services. The Company will compensate CFO Solutions at a rate of $45 per hour that Mr. Nielsen works.... Promotion of Sandeep Gupta
On September 28, 2007, Sandeep Gupta was promoted to President, SCO Operations. As a result of this promotion, Mr. Gupta's base salary was increased from $165,000 per year to $200,000 per year, subject to approval by the United States Bankruptcy Court.
Here's the hearing transcript, beginning on page 33, with SCO's lawyer, Arthur Spector, making these representations:
8 MR. SPECTOR: Finally, Your Honor, we have this
9 unfortunate motion, which we didn't expect to have to bring,
10 but when, sometimes things happen you don't expect. And one
11 of, and that is we've had a rash of mid-level and lower-level
12 accounting personnel leave. Now that's bad enough anyway,
13 even in the, even in the throes of an intended reduction in
14 force. It's because we have a year-end coming October 31st.
15 This is a public company, there's quite a lot of accounting
16 work that has to be done to prepare the proper regulatory
17 filings and the, and the like. And so the company is at a
18 crucial stage that it needs to get people, bodies behind the
19 desk to do the work. So the company, well, this would
20 normally be an ordinary course situation we wouldn't bring to
21 Your Honor, but - - they'd just go out and hire new people.
22 But they can't hire new people in that kind of a hurry. They
23 have to go to an accounting - - strike that. A - -
24 THE COURT: A temporary - -
25 MR. SPECTOR: - - a temporary agency.
Page 34:
1 THE COURT: Accountemps.
2 MR. SPECTOR: Accountemps. And get, and do it that
3 way. And I inquired of the client, and they didn't usually
4 do this. And I said, Well, haven't you done this? No, we
5 haven't. Well, I said, well in the utmost of caution, belt
6 and suspenders fashion, we'll come and bring this before Your
7 Honor, and get this approved formally. And that's what this
8 motion is about. You know, Mr. McMahon, on behalf of the US
9 Trustee had legitimate concerns about are we hiring the CFO
10 or other higher paid employees, and the answer to that, after
11 consultation with the client, is no. These are line
12 employees, non-management. He wanted that assurance, and if
13 he wants the names of the people being replaced, I'm not sure
14 if we've gotten to that level, but I suppose it can be
15 gotten, we just don't have it this early this morning. I wonder how long it will take Mr. Spector to catch on. Darl likes sports metaphors, so I'll just say that my new nickname for the SCOfolks is The Amazings. Don't forget the hearing is on Friday at 1:30 on whether Berger Silverman gets appointed as SCO's counsel.
|
|
|
|
| Authored by: Erwan on Wednesday, October 03 2007 @ 05:50 PM EDT |
If any.
---
Erwan[ Reply to This | # ]
|
| |
| Authored by: Erwan on Wednesday, October 03 2007 @ 05:51 PM EDT |
Don't forget to preview your clickies and html magic.
---
Erwan[ Reply to This | # ]
|
| |
| Authored by: Erwan on Wednesday, October 03 2007 @ 05:54 PM EDT |
| This is the thread to trap any open source .NET
discussions. ---
Erwan [ Reply to This | # ]
|
| |
| Authored by: Anonymous on Wednesday, October 03 2007 @ 06:00 PM EDT |
| Isn't it kind of bad form to be giving out bonuses and promoting people
immediately prior/subsequent to filling Chapter 11? Like, "Good job
everybody! This, finally, is the moment we've been working towards all these
years. Promotions
all round!"? [ Reply to This | # ]
|
| |
| Authored by: Anonymous on Wednesday, October 03 2007 @ 06:06 PM EDT |
Darl and his buddies certainly seem to be reorganizing SCO's remaining assets
pretty effectively.
[ Reply to This | # ]
|
| |
| Authored by: jmc on Wednesday, October 03 2007 @ 06:07 PM EDT |
Please can I have Chapter 11 for Christmas.
Thanks[ Reply to This | # ]
|
| |
| Authored by: Anonymous on Wednesday, October 03 2007 @ 06:10 PM EDT |
Revoke the promotions and benefits, pay Novell, and go directly to Chapter 7; so
tSCOG will not have to worry their heads about how to spend all of Novell's
monies.
[ Reply to This | # ]
|
| |
| Authored by: Anonymous on Wednesday, October 03 2007 @ 06:12 PM EDT |
Does anyone know if it is permissible / possible to make a public comment to a
party in the BK as a private individual unafiliated with either the Debtor or
any of the creditors?
I was thinking along the lines of email/write McMahon and asking him from the
standpoint of public comment on the status of such obvious potential BK
violations as cattleback and the $50000 (approx 75k actual value including paid
taxes, IRS allows up to 30% gross-up for tax purposes to cover both the original
sum and the additional "benefit" value of the tax coverage) preference
on the eve of bankrupcy.[ Reply to This | # ]
|
| |
| Authored by: JamesK on Wednesday, October 03 2007 @ 06:13 PM EDT |
When does someone notice all this nonsense and slap down SCO hard? Further,
what happens when they try to pay these guys without permission?
---
There are 10 kinds of people, those who understand binary and those who don't.
[ Reply to This | # ]
|
| |
| Authored by: Anonymous on Wednesday, October 03 2007 @ 06:16 PM EDT |
Anyone have any in-depth background info on the judge? How likely is he to see
that he's being taken for a fool by SCO?
[ Reply to This | # ]
|
| |
| Authored by: bezz on Wednesday, October 03 2007 @ 06:19 PM EDT |
Here's what SCO will say about the additional expenses. "Your Honor, we
didn't know the CFO would quit at the First Day hearing, but he did later. We
have our Annual Report due to the SEC and had to get a new CFO on board to meet
that date. And it will take him an estimated six months to really get up to
speed, so we hired our resigning CFO as a consultant."
And maybe the US Trustee has already agreed to these measures as they DO have a
legitimate need to meet an SEC requirement.
But in bankruptcy, it's all about equitable payment of debts, whether through
reorganization (Chapter 11) or liquidation (Chapter 7). Since we are still in
Chapter 11, the judge will give them leeway.
But enter the creditors committee. That is when the objections come into play
and it sounds like this judge is expecting other parties to come forward with
claims; at the very least, he seems aware that Novell's alone could be worth far
more than the assets are worth. And he'll probably get a creditor's committee
accounting of the potential eaarnings of a reorganized SCO -- it's "very
lucrative" Mobile and UNIX assets -- that call into question the ability to
ever repay even Novell, let alone the IBM and Red Hat potential liabilities.
Moves like spending this kind of money on executives may only be a drop in the
bucket, but will get pointed out by the creditor's committee when they make a
motion to boot existing management. And BK judges (particularly in this
jurisdiction) see this stuff enough to spot a case that should be converted to
Chapter 7. It will take at least a few months, but it will convert to Chapter
7.[ Reply to This | # ]
|
| |
| Authored by: tiger99 on Wednesday, October 03 2007 @ 06:29 PM EDT |
| IANAL, but sometimes I wish I was, so I could understand certain things a bit
better. However, PJ does a great job of filling in the gaps, so I think I now
understand laches and a few other terms. But I don't have any idea where
stupidity and insolence ends, and contempt of court begins. This nonsense, going
on a spending spree when allegedly bankrupt, is at best, insolence and
disrespect to bankrupcy law and the court, and in my opinion, Judge Gross. At
worst, it may be contempt. But there again, look how they treated Judge
Kimball. To put it plainly, they lied, for example about their solvency. I
hope that the judges have a nice chat on the phone, so that Judge Gross will be
clued up about what he is up against, and that he has a swift and decisive
clampdown on this disgraceful behaviour. As for Gupta, his "evidence" about
code copying showed that he is either an idiot or a liar, so he should enjoy his
$200k while he can. It will likely be his last real job in the software
industry, having comprehensively and publicly demonstrated his talents. [ Reply to This | # ]
|
| |
| Authored by: Anonymous on Wednesday, October 03 2007 @ 06:35 PM EDT |
SCO is plainly crumbling, and the remaining managers are
making it clear that they are only partying.
I hope there is some way for the court to fire the management,
close down the company and preserve whatever assets are left.
[ Reply to This | # ]
|
| |
| Authored by: GriffMG on Wednesday, October 03 2007 @ 06:46 PM EDT |
I can't see it any other way.
Will the BK court wear this, I *hope* not, but I don't know.
They (the BK court) must have seen this kind of thing before, they clearly
capped the SCO expenditure on temps, so I guess they will want a very clear
accounting for anything spent - and I also suspect the very fact that SCO are
in/nearly in Chapter 11 must mean that suppliers are at risk of not being paid
(i.e. their own risk).
Perhaps the BK Judge will 'just say NO!'
---
Keep B-) ing[ Reply to This | # ]
|
| |
| Authored by: Yossarian on Wednesday, October 03 2007 @ 06:56 PM EDT |
It seems like a pretty old attitude. Things are bad anyway,
why not have some fun before all will end? See
Isaiah 22:13
But see, there is joy and revelry,
slaughtering of cattle and killing of sheep,
eating of meat and drinking of wine!
"Let us eat and drink," you say,
"for tomorrow we die!"[ Reply to This | # ]
|
| |
| Authored by: rsi on Wednesday, October 03 2007 @ 07:00 PM EDT |
For the Judge to realize that Chapter 11 is not the way to go.
Hopefully, he will either convert it to Chapter 7, or reject the Bankruptcy
completely, now that he sees first hand how corrupt the Management are, and send
it back to Utah, to let Novell, IBM, and Red Hat tear them apart, pay off the
creditors, and divide up the assets and IP.
SCO is not a company that is interested in "Restructuring"![ Reply to This | # ]
|
| |
| Authored by: Anonymous on Wednesday, October 03 2007 @ 07:30 PM EDT |
SCO will most likely get its executive pay and/or bonus requests. The excuse is
always "We need to retain critical executive management for future business
operations after reorganization". . . even though those same managers led
the company into bankruptcy in the first place. It's an insult to your
intelligence but bankruptcy judges routinely approve these outrageous requests.
Many low-level
employees are fired or have reductions in salary -- while
the top brass profit.
[ Reply to This | # ]
|
| |
| Authored by: SpaceLifeForm on Wednesday, October 03 2007 @ 08:05 PM EDT |
| Link
Hon. Kevin Gross is a U.S. Bankruptcy
Judge for the District of Delaware in Wilmington, appointed on March 13, 2006.
Prior to taking the bench, he was with the firm of Morris and Rosenthal, where
his practice consisted of general litigation with particular emphasis on the
representation of shareholders before the Delaware Court of Chancery and federal
courts. Judge Gross was an active participant in the Wilmington desegregation
case on behalf of the plaintiff class beginning with the remedy phase of that
case. He has handled several child-custody and parental-rights cases and has
mediated many cases pending in bankruptcy court, district court, superior court
and the court of chancery. Judge Gross is a member of the Delaware Court
Bankruptcy Rules and Practice Committee, Delaware Court of Chancery Rules
Committee and the Board of Professional Responsibility of the Delaware Supreme
Court. He received his B.A. from the University of Delaware and his J.D. from
the Washington College of Law of American University, where he was a member of
the Law Review.
Link
Judge Gross has been in this role for less
than 2 years.
Kevin Gross is the lead bankruptcy partner at
Rosenthal Monhait, a firm perhaps known more for shareholder litigation practice
than its bankruptcy practice. According to www.BankruptcyInsider.com, Gross
worked on two 2001 cases, representing noteholders in the Borden Chemicals and
Plastics LP one and represented interested parties in Epic Capital Corp.'s
proceedings. Still, Gross is well-known in the clubby Wilmington bankruptcy
circles as one of the area's most respected bankruptcy
mediators.
Link
A case from earlier this
year.
Judge Gross ruled that the automatic stay did not apply to
the policy proceeds at issue and, as a result, the Chapter 7 trustee was not
entitled to an injunction to stop them from being used to settle the other
litigation.
---
You are being MICROattacked, from various angles, in a SOFT manner. [ Reply to This | # ]
|
| |
| Authored by: Anonymous on Wednesday, October 03 2007 @ 08:15 PM EDT |
Want to live like a king? File for bankruptcy.
Life of the rich and famous - SCO style.
I guess that this is a real statement about business in the
USA and its overseers.
What's that song? "... take your money and run ..."
[ Reply to This | # ]
|
| |
| Authored by: Bill The Cat on Wednesday, October 03 2007 @ 09:41 PM EDT |
Guys, we can do this. Just a little more effort, a little more
creative thinking, keep the trustee lulled, and I believe SCO can ace Novell
completely. I believe this IS what will happen. ---
Bill The Cat [ Reply to This | # ]
|
| |
| Authored by: SilverWave on Wednesday, October 03 2007 @ 10:03 PM EDT |
.
---
Georg Greve (FSFE):
A Screaming victory, I mean “Sometimes The Good Guys Do Win!”
Monday 17 Sept 2007 - STGGDW! ;-)
[ Reply to This | # ]
|
| |
| Authored by: Anonymous on Wednesday, October 03 2007 @ 10:35 PM EDT |
SCO's behavior is so over the top that I am thinking judge Gross won't be able
to respond. It will not matter one iota that IBM has one of the authors of the
BK code because ultimately 100% of the power resides with this judge. Appeal?
By that time the players will have their new scheme going full steam and fully
insulated from all of this mess.
Right now SCO is just a vehicle to get to their next game. Watching for that
next game is more important than what happens here.[ Reply to This | # ]
|
| |
| Authored by: Anonymous on Thursday, October 04 2007 @ 01:58 AM EDT |
For a well-qualified professional, $105/hour is not excessive. You can't
compare it with a salary, because this is a temporary position - he might not be
needed in 6 months from now, and by that time, the economy might be in a
recession and he might not be able to find another contract. That risk is taken
into account when setting the rate for a short-term contract.
$105
isn't as much as it used to be. I'm just a contract programmer, with no
supervisory duties at all, and my hourly rate (not in the USA) is equivalent to
$106/hour at today's exchange rate. I have a lot of business knowledge in
the area in which I work, and experience right through the life cycle from
requirements analysis onwards, but Nielsen's experience in his field is probably
comparable to my experience in my field. Plus he has a high-profile role, which
has risks of its own (e.g. being pilloried in Groklaw).
Nielsen has
probably proved he can do a top-notch, professional job in a field requiring
extensive study, training, and experience. If you want to point to SCO people
who are getting too much money, focus on people like McBride. He has never
demonstrated any useful ability whatever, except talking himself into high-paid
jobs. [ Reply to This | # ]
|
| |
| Authored by: Anonymous on Thursday, October 04 2007 @ 06:45 AM EDT |
We all thought it was sneaky to give Tibbets a raise one day before filing for
bankrupcy. However, they act as if nothing has changed and give Gupta a big
raise too. The pattern is clear; what disturbs me is the disrespect for the law
and other people's property (shareholders, Novell) that these guys so brazenly
display.[ Reply to This | # ]
|
| |
| Authored by: vb on Thursday, October 04 2007 @ 11:01 AM EDT |
I had the unfortunate experience of being a shareholder of a business that went
into a similar type of bankruptcy. That is, a bankruptcy from which exit is
unlikely by any other path than liquidation.
The board and management team did the same things that SCO is doing now:
cleaning out the vault. The purpose of Chapter 11 is to buy time. Some
business use the time to get back on their feet through reorganization. But
there is another use of Chapter 11 time: drain the cash and flow it out to the
officers, management, and business friends such as complicit lawyers.
It's all very familiar: bonuses, rises, and fees flow richly from the corporate
coffers. What should be a low cost legal and accounting procedure becomes the
largest company expense in years.
It's all perfectly, barely, legal. The bankruptcy lawyers know how to do this
within legal limits. Only the most obscene flouting of the bankruptcy laws
will bring down any punishment.
My prediction is that they will not be stopped by the bankruptcy judge or their
friendly trustee. And there will be no shareholder lawsuit. I won't predict
how the Novell or IBM litigation will conclude, but I definitely predict that
SCO will not pay out a penny.
[ Reply to This | # ]
|
| |
| Authored by: Anonymous on Thursday, October 04 2007 @ 11:02 AM EDT |
I don't know about the Gupta raise, but a CFO temp for 105 per hour, is in my
opinion reasonable, perhaps on the cheap side, since they no longer have one.
A temp doesn't qualify for vacation, health insurance or other benefits, so he
will only get paid when actually working.
Also a temp indicates they won't be needing him for very long. Now I don't know
about you, but if I've got a company in a position like that, I would want him
to be looking out for my long term financial prospects, not someone who expects
to be looking for a new job in the not too distant future.[ Reply to This | # ]
|
| |
| Authored by: rsteinmetz70112 on Thursday, October 04 2007 @ 11:24 AM EDT |
What new insurance?
---
Rsteinmetz - IANAL therefore my opinions are illegal.
"I could be wrong now, but I don't think so."
Randy Newman - The Title Theme from Monk
[ Reply to This | # ]
|
|
|
|
|
