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| Hearing Nov. 6th on Novell's Lift of Stay Motion and SCO's Asset Sale Motion |
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Wednesday, October 24 2007 @ 06:46 PM EDT
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This seems just a little bit odd. SCO yesterday filed its Motion to Fix a Hearing Date and Shorten Time on its Emergency Motion for an Order (A) Approving Asset Purchase Agreement, (B) Establishing Sale and Bidding Procedures, and (C) Approving the Form and Manner of Notice of Sale. The
Certificate of Service [PDF] shows that it was served yesterday by "Overnight Delivery."
The judge already signed
the Order today. So he signed it before anyone could carefully read it, let alone oppose it. Now, I freely confess that I'm not a specialist in this area, but perhaps any bankruptcy folks out there can tell us if that is normal. It certainly isn't in other civil courts. I guess Delaware got its friendly-to-corporations reputation for a reason.
Anyway, the fireworks are scheduled for the hearing on November 6, when both SCO's "we want to sell our assets and keep our liabilities" motion and the argument over whether or not to lift the stay so Novell can get a dime out of this will both be heard. I'm sure you can see a connection between the two. That's November 6 at 11 AM. Objections to SCO's motion to sell its assets to York Capital/hold an auction must be filed by November 1 by 4 PM. Another filing is the request by SCO to keep Tanner as its accountants. The only other interesting filing is a stipulation [PDF] between Novell and SCO that relates to SCO's assertion, the Utah August 10 ruling notwithstanding, that the money Novell says it is due is part of the SCO estate. If it were part of the estate, as SCO claims, then a certain time-related rule could kick in and SCO apparently was worried Novell would say the stay had been lifted. That is the kind of procedural trick SCO might pull, but Novell stipulates that it has no plan to pull a fast one, and that the stay is in place unless the court orders otherwise. So, a lot depends on what happens on November 6. If SCO gets the judge to rubberstamp the plan, and the auction/sale happens, I don't really see how anyone gets paid, other than York, SCO, its management, and whoever is backing this little adventure, who presumably feels it is getting its money's worth somehow.
Today's filings:
154 -
Filed & Entered: 10/23/2007
Certificate of Service
Docket Text: Certificate of Service Regarding Emergency Motion of the Debtors for an Order (A) Approving Asset Purchase Agreement, (B) Establishing Sale and Bidding Procedures, and (C) Approving the Form and Manner of Notice of Sale (related document(s)[149] ) Filed by The SCO Group, Inc.. (O'Neill, James)
155 -
Filed & Entered: 10/23/2007
Certificate of Service
Docket Text: Certificate of Service Regarding Motion to Fix a Hearing Date and Shorten Time on Emergency Motion of the Debtors for an Order (A) Approving Asset Purchase Agreement, (B) Establishing Sale and Bidding Procedures, and (C) Approving the Form and Manner of Notice of Sale (related document(s)[151] ) Filed by The SCO Group, Inc.. (O'Neill, James)
156 -
Filed & Entered: 10/24/2007
Order on Motion to Shorten Time
Docket Text: Order Fixing Hearing and Shortening Notice on Emergency Motion of the Debtors for an Order (A) Approving Asset Purchase Agreement, (B) Establishing Sale and Bidding Procedures, and (C) Approving the Form and Manner of Notice of Sale. (Related Doc # [151]) Order Signed on 10/24/2007. (LCN, )
157 -
Filed & Entered: 10/24/2007
Notice of Hearing (B)
Docket Text: Notice of Hearing Notice of Emergency Motion of the Debtors for an Order (A) Approving Asset Purchase Agreement, (B) Establishing Sale and Bidding Procedures, and (C) Approving the Form and Manner of Notice of Sale (related document(s)[156], [151], [149] ) Filed by The SCO Group, Inc.. Hearing scheduled for 11/6/2007 at 11:00 AM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 11/1/2007. (Attachments: # (1) Exhibit A # (2) Certificate of Service and Service List) (O'Neill, James)
158 -
Filed & Entered: 10/24/2007
Application to Employ (B)
Docket Text: Application to Employ Tanner LC as Accountants to the Debtors Nunc Pro Tunc to October 2, 2007 Filed by The SCO Group, Inc.. Hearing scheduled for 12/5/2007 at 10:00 AM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 11/13/2007. (Attachments: # (1) Notice # (2) Exhibit A - Declaration of Kent M. Bowman# (3) Exhibit B # (4) Proposed Form of Order # (5) Certificate of Service and Service List) (O'Neill, James)
159
Filed & Entered: 10/24/2007
Certification of Counsel
Docket Text: Certification of Counsel Regarding the Order Approving the Stipulation Between the Debtors and Novell, Inc. Consenting to Hearing on November 6, 2007 (related document(s)[150], [89] ) Filed by The SCO Group, Inc.. (Attachments: # (1) Exhibit 1) (O'Neill, James)
160 -
Filed & Entered: 10/24/2007
Affidavit/Declaration of Service
Docket Text: Affidavit/Declaration of Service of Kimberly A. Beck re: Docket Nos. [141], [142] and [143] (related document(s)[143], [142], [141] ) Filed by Novell, Inc.. (Nestor, Michael)
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| Authored by: SpaceLifeForm on Wednesday, October 24 2007 @ 06:51 PM EDT |
Please make any links clickable.
---
You are being MICROattacked, from various angles, in a SOFT manner.[ Reply to This | # ]
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| Authored by: SpaceLifeForm on Wednesday, October 24 2007 @ 06:53 PM EDT |
If any.
---
You are being MICROattacked, from various angles, in a SOFT manner.[ Reply to This | # ]
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| Authored by: SpaceLifeForm on Wednesday, October 24 2007 @ 06:56 PM EDT |
| Please note in the subject line which article you
are
referencing.
---
You are being MICROattacked, from various angles, in a SOFT manner. [ Reply to This | # ]
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| Authored by: SpaceLifeForm on Wednesday, October 24 2007 @ 07:06 PM EDT |
I have to wonder, did the judge read it?
---
You are being MICROattacked, from various angles, in a SOFT manner.[ Reply to This | # ]
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| Authored by: Anonymous on Wednesday, October 24 2007 @ 07:07 PM EDT |
I'm reserving judgement on how friendly the BK Court is. If we see a "nice
try, motion denied" out of the Court I would lean one way. If the deal
goes through I will really wonder where the payoff is.
;-)[ Reply to This | # ]
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| Authored by: Anonymous on Wednesday, October 24 2007 @ 07:09 PM EDT |
What did the judge sign an order for?
Is there a problem with that?
If so, then what?
[ Reply to This | # ]
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| Authored by: Anonymous on Wednesday, October 24 2007 @ 07:30 PM EDT |
First, Novell's team seems to have shown up at the first hearing expecting to
get a lift of the automatic stay of the Utah litigation by just reciting the
progress of the litigation -- and getting turned down at least for the time
being pending hearing of their motion.
Now Novell's team have made a complicated written admission by stipulation, when
all that (it seems) was likely needed was a much briefer and simpler
stipulation, that Novell would not seek to take any advantage of the difference
between 30 days as in 11 USC 362(e) and 33 days as in the actual interval before
the hearing. (But what were Novell's lawyers thinking about to give any such
concession at all? What do they get for Novell in return?)
There's an old saying that 'the more words there are, the more words there are
about which doubts can be entertained'. SCO has certainly shown itself to be
enthusiastic in trying to generate such doubts. If I were Novell I would want
to try and limit their opportunities for mischief-making.
[ Reply to This | # ]
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| Authored by: Yossarian on Wednesday, October 24 2007 @ 07:34 PM EDT |
SCO had all the sweet time in the world preparing this move.
Now Novell and/or IBM and/or Red Hat and/or... have less
than two weeks to make research, form some legal arguments,
file objections, etc.
The court doth move too fast, methinks[ Reply to This | # ]
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| Authored by: Anonymous on Wednesday, October 24 2007 @ 07:51 PM EDT |
One certainly can't complain that SCO is delaying things, which leads me to
wonder why they are in such a hurry. Is it possible that if everyone had time to
respond, that SCO wouldn't like the response.
Nay, couldn't be.[ Reply to This | # ]
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| Authored by: Anonymous on Wednesday, October 24 2007 @ 07:51 PM EDT |
At the risk of becoming tiresome, I will remind everyone that it's hardly a
foregone conclusion that Novell and the other creditors don't want SCO to sell
its Unix business. On the contrary, they may see it as to their benefit, if the
price is right. The pot of money that SCO receives in return is hardly theirs
to do as they like with, they can't buy staples without getting approval from
the BK court. The creditors have to be asking themselves, which way do we get
paid more, from SCO's crummy management of its Unix business, or from a pot of
money. When somebody buys a business, they can potentially pay more than it's
worth at the moment if they think they can manage it better than it's currently
being managed. That seems quite possible in this case.
So here's my prediction: there are only two things Novell might object to in the
sale, one is that the amount of money isn't enough (or they don't like the
payment schedule), and the other is the $10 million litigation fund, which
appears to be an attempt to put some of the purchase price out of reach of the
creditors.[ Reply to This | # ]
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| Authored by: TheBlueSkyRanger on Wednesday, October 24 2007 @ 07:56 PM EDT |
Hey, everybody.
Forgive me skipping the exclamation point I usually put in my salutation. I'm
currently listening to "I Don't Feel Like Dancin'".
None of this is adding up to me. The only thing that makes the equation balance
is, SCO is doing this to get away from the mess it got itself into.
1) A fund company takes over their software business. Anyone else see
something wrong here?
2) A sale gives them money to cover themselves in the event of a bad judgment
by Kimball, and still enough for the appeal.
3) I don't see how anyone could possibly want to buy the litigation from SCO.
We've seen, in court and everywhere, that there is no infringement and no right
to sue. What exactly are these people intending to buy?
It's bad enough we live in an M$ world, where anything they do not control must
be destroyed. But then, here's SCO, smiling like the villain at the end of the
movie that the good guys can't quite catch or can't quite prove they did it.
Toodles, as they head for a plane taking them where they can't be reached.
I don't blame the legal system. It's not it's fault people don't play fair.
But I don't know what is worse, that people so blatantly game a system set up to
protect the innocent, or people who are supposed to guard it allowing it to be
manipulated.
I just don't see this ending with justice. I truly fear that, at the hearing,
the judge is going to overlook that SCO is trying to hide from the consequences
of its actions and this mess will continue with different hands stirring the pot
(York). And McBride goes on his tour, talking about how his poor little company
and reputation were destroyed by Novell and IBM's little campaign, how they
can't admit they were wrong and SCO was right.
Believe me, I'm hoping I'm wrong. And I suppose tomorrow's hearing might give
us some idea which way the judge is leaning, as well as Novell's strategy. I
just don't think Novell is after their money. I keep thinking they want
something else, and the money is the pry bar they are using.
Dobre utka,
The Blue Sky Ranger[ Reply to This | # ]
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- There's No Arrest For The Wicked - Authored by: Yossarian on Wednesday, October 24 2007 @ 08:02 PM EDT
- There's No Arrest For The Wicked - Authored by: Yossarian on Wednesday, October 24 2007 @ 08:10 PM EDT
- Ah... But That's "The Rub" - Authored by: Anonymous on Wednesday, October 24 2007 @ 08:50 PM EDT
- But IBM - Authored by: Anonymous on Wednesday, October 24 2007 @ 11:20 PM EDT
- But IBM - Authored by: Anonymous on Wednesday, October 24 2007 @ 11:40 PM EDT
- But IBM - Authored by: brian on Thursday, October 25 2007 @ 12:24 AM EDT
- Because IBM - Authored by: kh on Thursday, October 25 2007 @ 03:53 AM EDT
- There's No Arrest For The Wicked - Authored by: jonathon on Thursday, October 25 2007 @ 02:20 PM EDT
- There's No Arrest For The Wicked - Authored by: Anonymous on Thursday, October 25 2007 @ 05:10 PM EDT
- There's No Arrest For The Wicked - fund company buying... - Authored by: Anonymous on Sunday, October 28 2007 @ 11:01 AM EDT
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| Authored by: Anonymous on Wednesday, October 24 2007 @ 08:10 PM EDT |
To a foreigner, as me, the [SCO] wording 'Motion to Fix" a Hearing Date[...]'
does indeed sound like a colloquialism to me. Is that comme il faut? Never
mind... The SCOyerns (Sw. skojare, [pronounce it 'skaw-ya-re'] ~ En. scoundrel)
wouldn't mix metaphors,
because of a sparkle of fresh air, and:
A metaphor is a glorious
thing,
A diamond ring,
The first day of summer
A metaphor is a
breath of fresh air,
A turn-on,
An aphrodisiac
Chicks dig, dig,
d-i-g, dig, dig metaphors,
Use them wisely,
Use them well,
And
you'll never know the hell of loneliness
A metaphor is a popular
place,
A pocket space,
A multiplex showing,
A remake whose action is
louder than words,
She whispers "can we be going, going?"
Chicks
dig, dig, d-i-g, dig, dig metaphors,
Use them wisely,
Use them
well,
And you'll never know the hell of loneliness
Whose up for a
metaphor?
(We're up for a metaphor)
Are you chicks up for a
metaphor?
(Yes, we're up for a metaphor)
Don't, don't, don't, don't,
don't mix them
(We, we, we won't mix them)
Don't, don't, don't, don't,
don't mix them
(We wouldn't dream of mixing them)
Use them
wisely,
Use them well,
And you'll never know the hell of
loneliness
A metaphor is a glorious thing,
A diamond ring,
The
first day of summer
A metaphor is a fresh air,
A turn-on,
An
aphrodisiac
"
As an end user of the volunteer labor in
free software community, the ethics of SCO doesn't turn me on; in fact I think
they are no fun at all.
IMANAL - just didn't login
[ Reply to This | # ]
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| Authored by: Anonymous on Wednesday, October 24 2007 @ 08:31 PM EDT |
If they sell ME, Inc and the Unix business, how can SCO qualify as a chapter 11
candidate anymore? What they retain is not a going concern. All they would have
left is a couple of lawsuits they are losing. That would argue for an immediate
Chapter 7. Since that's the only way this could play out, why not go to Chapter
7 right now, instead of giving some insider investor the ability to abscond with
the assets?[ Reply to This | # ]
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| Authored by: Anonymous on Wednesday, October 24 2007 @ 08:48 PM EDT |
Reasoning this out, of SCO were in a liquidation phase of bankruptcy (which it's
not, yet) then there's no way that the BK court would allow SCO to take an asset
and sell it, without proof that the (1) full value was being received and that
(2) all the funds that constituted the value went to the 'estate' to settle the
claims of the creditors.
Because SCO is still in the 'reorganization' phase of bankruptcy, however, they
have more leeway in taking steps to reorganize their business.
So what they are saying to the court with this deal is, in effect:
"We need $10M to fund the rest of the litigation. We're going to sell off
the rest of our assets and just keep our litigation as our "business".
But we are going to structure the sale such that it will allow a paltry sum to
feed the creditors -- just enough to appear credible -- and then try to set up a
'untouchable' fund that be outside the creditor's reach, to fund our
litigation."
If that will fly in Bankruptcy court, then, as Dickens wrote, "then the
law is an ass."
Now I don't THINK that the law is an ass, and so I think that SCO must
necessarily fail here.[ Reply to This | # ]
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| Authored by: Anonymous on Wednesday, October 24 2007 @ 08:49 PM EDT |
| Novell is claiming that the $30 to $35 million that SCO owes them is not
a debt, but rather Novell's money which SCO is holding. SCO does owes Novell
some other money as debt, but these sums are much smaller. This may means that
Novell would not necessarily have a major voice on the creditor's committee.
SCO's has a window of opportunity to act before Novell can get a court judgement
setting an amount which SCO must turn over to Novell.
So who are SCO's
biggest acknowledged creditors? The largest is BSF, SCO's lawyer
($515,690.86). The second biggest is Amici ($500,650.73), which in the
past had links to BSF and may have some form of residual relationship in matters
relating to SCO. The third is Microsoft ($158,973.75). Novell is fourth at
$61,375.91 (unpaid royalties). The rest trail off rapidly from there, and
include a number of other SCO insiders. Few small creditors could afford to
spend time acting on a creditor's committee for a few thousand dollars.
In other words, the obvious candidates for a creditor's committee look to be
conspicuously stacked against Novell. A creditor's committee composed of BSF,
Amici, and Microsoft may be quite happy to approve the asset sale to York.
No doubt York would also be quite happy to hire a firm with BSF's
reputation to assist them in their future litigation needs. Amici's motivations
are less transparent, but their odd financial relationship with SCO seems
suspicious. Microsoft no doubt just wishes the best for SCO's Unix customers.
And why would York want to buy into a failed litigation strategy? If SCO
couldn't pull off the "they stole my IP" game, why would York think they could
do any better? Note the reports that they will set up a "special vehicle" to
hold the SCO assets. They intend to have a separate subsidiary which they hope
will give them legal insulation in case things go wrong.
York is starting
to look suspiciously like Baystar Mk II. New-SCO keeps the disastrous IBM and
Novell cases and goes down with that sinking ship. York sets up New-New-SCO and
pursues weaker prey. This is a shell game. SCO wants to shed the IBM and Novell
cases like a snake's skin while they continue to pursue the "Linux Licensing"
game. [ Reply to This | # ]
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| Authored by: Anonymous on Wednesday, October 24 2007 @ 09:00 PM EDT |
I thought that after Anderson Accounting debacle - that
"funny/crooked"
accounting practises were ended "for ever".
Wouldn't accountants be advising SCO and others on this whole "scam"?
Or are
the accoutants playing the usual game of using the "GREY AREAS" to
push the
crap through that they are throwing together?
[ Reply to This | # ]
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| Authored by: Anonymous on Wednesday, October 24 2007 @ 09:06 PM EDT |
You can talk about statutes, buyouts, tradeoffs, stock prices, stays
and final orders all you want.
The 800 pound gorilla in all this is that SCO stole Novell's money. I
simply can't see how any court can allow that to happen, as a matter
of public policy. All the rest is white noise.
[ Reply to This | # ]
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| Authored by: Anonymous on Wednesday, October 24 2007 @ 09:25 PM EDT |
| Someone posted the "SCO checkbooks as text" under the "Swiss Arbitration" story.
The following has taken these data and applied some basic summary analysis to
see where the money went. As they say, if you really want to know what is going
on, follow the money.
A cut-off value of $10,000 has been used to allow
us to ignore numerous small bills.
- Total cheques issued between
15/06/2007 and 14/09/2007 = $3,697,075.85
- Total cheques issued
between 15/06/2007 and 14/09/2007 where any single recipient received a total of
more than $10,000 = $3,586,604.52
Payments by Business
Type
Next, let's see where the money went, according to what line of
business the recipients appear to be in.
- Lawyers =
$1,171,683.51
- Benefits = $496,071.71
- Experts =
$402,849.95
- Rent = $294,086.14
- General business
expenses = $256,239.03
- Payments directly to executives or board
members = $213,095.54
- Insurance = $193,841.97
- PR =
$123,954.42
- Payments to other software companies =
$96,322.16
- Miscellaneous = $92,629.60 (this includes recipients
whose line of business could not be readily determined)
- Accountants =
$73,073.00
- Detectives = $61,479.33
- Dealers =
$61,040.91 (Companies that appear to be re-sellers for SCO)
- Banks =
$50,237.25
Payments which appear to be purely litigation related
(lawyers, experts, accountants, detectives) account for $1,709,085.79 of
this total. This means that almost have (47%) of SCO's direct cash outlays via
cheque in this period are purely litigation related. This also represents a
significant amount of SCO's total remaining net worth.
Biggest
Recipients
The biggest recipients are:
- BERGER SINGERMAN PA
(lawyer) = $425,000.00
- UNITED HEALTHCARE INSU (benefits) =
$240,037.90
- NORTH HARVARD GROUP LL (experts) = $223,148.18
- DORSEY & WHITNEY LLP (lawyer) = $218,633.62
- PREMIUM
ASSIGNMENT (insurance) = $193,841.97
- NEW YORK LIFE (benefits) =
$177,694.95
- GRE MOUNTAIN HEIGHTS (rent) = $154,053.96
- THE CANOPY PROPERTIES (rent) = $140,032.18
- KEVIN MCBRIDE
(lawyer) = $126,811.81
- BOIES, SCHILLER & FLEX (lawyer) =
$99,674.16
It should be noted that as well as payments to NORTH
HARVARD GROUP LL, direct payments to two of their experts were made
($90,400.00 to GARY PISANO, and $59,400.00 to CHRISTINE A BOTOSAN, both
North Harvard employees or partners).
Payments to Executives and Board
Members
The following executives and board members received payments.
For many of them, it is doubtful that these represent expenses, as they are in
nice round numbers (e.g. $60,000 for Michael Olson). Ralf Yarrow received
two identical payments of $8,750.00 on the 20th and 24th of
August.
- MICHAEL OLSON = $60,000.00
- BERT YOUNG =
$60,000.00
- FELIX EISENBERG = $31,360.87
- RALPH YARRO
= $17,500.00
- DAN CAMPBELL = $11,250.00
- DUFF THOMPSON
= $11,250.00
- OMAR LEEMAN = $11,040.61
- J KENT
MILLINGTON = $10,694.06
Payments to
Dealers
- SYKES GLOBAL SERVICES = $13,340.91 This company
seem to be a dealer or rep in the Netherlands. This is likely commission.
- SALES SYNERGY CANADA = $22,500.00 This company acts as a
representative for companies that don't have a direct presence in Canada. If SCO
is using them, then their Canadian subsidiary may be just a shell with no actual
employees. This is likely commission.
- FKI LOGISTICS = $25,200.00
This appears to be a material handling company - that is they make and install
conveyor systems. This is unlikely to be commission, as they aren't a dealer.
Rather it may represent return of goods due to a cancelled order. Perhaps a
customer got cold feet and decided they didn't want SCO Unix in their new
automated warehouse system?
Other Interesting
Payments
Some particularly interesting payments
were:
- STEALTH INSIGHT = $61,479.33 These a firm of private
detectives. That is quite a sum of money. If we assume they charge $200 per
hour, that represents nearly two months of steady work.
- G2 COMPUTER
INTELLIGEN = $13,500.00 This is Maureen O'Gara's PR firm. This is what she
received in a period where she wasn't particularly active on their behalf. It
would be interesting to know just how much she was being paid previous to this.
- Several cheques for $0 were issued to JACKSON HOLE ADVISORS,
BOIES, SCHILLER & FLEX, CCI NETWORK SERVICES, VERISON, VERITAS SOFTWARE, and
SALES SYNERGY CANADA. It is difficult to see what these might be for, unless it
was to set up some sort of automatic payment system (which might require a
sample cheque).
Last Minute Payments
This is very
interesting. There is a sudden surge of payments on the days immediately
preceding bankruptcy. SCO issued cheques on a total of 42 days in the three
months prior to bankruptcy. The median weekly payment was $204,685.06. Then
suddenly, a few days before declaring bankruptcy they make a series of large
payments. These were as follows:
- Lawyers = $668,726.95 to four law
firms.
- Executives = $120,000.00 to BERT YOUNG and MICHAEL OLSON
($60,000 each - what nice round numbers).
- Bankruptcy consultants
= $25,000.00
- PR firms = $51,491.27 (mainly to COLTRIN &
ASSOCIATES)
- Detectives = $8,333.00 (STEALTH
INSIGHT)
- Several other smaller payments to various parties.
Total payments during the week prior to declaring bankruptcy (10th
to the 14th of September) totaled $977,405.32. The ones listed above
accounted for $873,551.22 of this (89%). This is larger than the next two
largest weekly payment totals combined, and nearly 5 times the size of the
median weekly payments.
No doubt these parties are thankful that SCO had
the foresight to pay these bills before declaring bankruptcy. Too bad they
forgot to pay Novell.
Debts
If we look at debts over $10,000
we see the following pattern. First there is a series of software and hadrdware
companies which are owed a total of $516,549.87
- Microsoft
Licensing, Inc. = $158,973.75
- Novell, Inc. - Royalties =
$61,375.91
- Veritas Software = $37,881.33
- Mirage =
$31,389.14
- Fujitsu Services = $25,788.55
- Unisys
Corporation = $25,302.11
- Intel Corporation = $25,302.11
- HP-Nonstop Royalty Acccounting = $25,302.11
- KSJ
Consulting = $21,781.25
- E-Trade Financial Corp Services =
$20,000.00
- Edison Design Group, Inc. = $15,000.00
- Strhold S.p.a. = $12,206.79
-
- Sun Microsystems, Inc. =
$11,664.50
- Profile Consulting, Inc. = $11,400.00
- LynnSoft = $11,400.00
- Shenyang Neusoft Co LTD =
$11,364.82
- 4 Front Technologies = $10,417.50
With
the exception of Veritas, SCO has no history of making payments to any of these
companies in the previous 3 months (Veritas was paid $39,952.25 at the end
of June). SCO likely pays royalties to Veritas for using their volume manager,
or some other software that they ship as part of SCO Unix. E-Trade Financial
Corp Services is not a software company, but it is likely that they are a large
customer who is owed support.
SCO has not paid royalties to Novell at any
time in the previous 3 months (SCO admits to owing $61,375.91 - this does
not seem to be a very substantial royalty stream).
The rest of the supposed
debts are probably the value of support contracts which SCO owes to purchasers
of SCO Unix. The hardware companies would have customers which run SCO Unix. The
software companies appear to have products which run on SCO Unix (Microsoft
supports SCO Unix as part of their "Services for Unix" package in Windows
Server).
These companies are therefore likely only notional "creditors". If
that is the case, then they would be primarily looking to have their support
contracts fulfilled.
The other creditors are a different story. With two
exceptions, they have been receiving regular payments over the previous three
months.
- Boies, Schiller & Flexner = $515,690.86 (received
$99,674.16 in 2 payments)
- AMICI LLC = $500,650.73 (no payments
in previous 3 months)
- Hatch James & Dodge = $34,961.52
(received $78,735.54 in 4 payments)
- Keven McBride = $30,505.00
(received $126,811.81 in 4 payments)
- Boetticher, Hasse, Lohman =
$17,952.50 (received $13,683.72 in 1 payment)
- American Express
= $14,902.29 (received $58,209.97 in 4 payments)
- Hyperion
Consulting, Inc. = $13,842.00 (received $14,350.00 in 2 payments)
- Silverman Heller Associates = $10,352.35 (received $10,178.75
in 1 payment)
For the debts of more than $10,000 SCO had been
paying their bills (with one exception). The total owed is $1,138,857.25.
The bulk of that however is owed to two creditors, Boies, Schiller & Flexner
and AMICI LLC (total $1,016,341.59). The remaining "large" creditors are
only owed a total of $122,515.66. The minor creditors are owed a total of an
additional $176,881.83 in sums between $9,959.00 and $1.20 (I
haven't done any serious examination of these figures).
In other words, SCO
does not appear to have been in immediate financial crisis prior to seeking
bankruptcy protection. They seem to have been paying their bills (except see
below). A large chunk of their "debt" appears to represent their support
commitments to their customers, for which they would provide service rather than
be required to pay out cash.
They have two really odd debts though. One is
of $515,690.86 to Boies, Schiller & Flexner. SCO had paid almost
$100,000 do them in the previous 3 months, but seemed to still have a large
accumulated debt. Perhaps BSF has an "easy payments plan" where SCO makes
regular fixed payments on a fluctuating debt.
The oddest debt though is the
$500,650.73 owed to AMICI. There is no record of payments to Amici in the
previous 3 months. Amici is now owned by Xerox, but it was originally owned by
relatives of David Boies. It is possible that BSF gave SCO a special deal on
Amici - no payments until victory.
You have to wonder though. Amici just
stores records. Lots of companies do this (although most don't specialise in
litigation records). All that is required is just a warehouse with some steel
shelves, some tags, and an inventory book (or computer program). Isn't
$500,000 a lot of money just to store and retrieve records? Even if they
also made copies, that's still a lot of money. Combine this with the "no
payment" history and the sale to Xerox, and it starts to look even funnier. It
would be interesting to know just what Amici's books looked like when the
company was sold to Xerox. Did a sudden $500,000 contract with SCO give
Amici a nice looking earnings curve that Xerox didn't probe into? Does BSF (or
someone associated with them) have a retained interest in the contract between
Amici and SCO? If this is so, then Amici may not really be a party which is
independent of BSF on this matter. This could be significant for bankruptcy
purposes, as the two largest creditors may be operating in concert in a manner
which isn't in the best interests of the other creditors.
Conclusion
The financial fallout from the SCO bankruptcy could
prove as interesting as the rest of the case. If the creditors start to dig into
where the money went, some even more interesting information might pop out. The
peculiar relationship of Amici would also seem to bear looking into.
[ Reply to This | # ]
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| Authored by: Anonymous on Wednesday, October 24 2007 @ 09:43 PM EDT |
Does Novell have any rights (right of first refusal or approving buyer) that
might affect SCO selling off it's Unix stuff?
(Aside from that any proceeds should escrowed pending resolving Novell's
conversion claims)[ Reply to This | # ]
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| Authored by: Anonymous on Wednesday, October 24 2007 @ 09:43 PM EDT |
I'm getting less and less confident that this judge actually has a clue about
the dirty tricks that SCO pulled in order to get here, or the depths of perfidy
that SCO is willing to sink to in order to get its way.
Signing an order so quickly, before anyone has any chance to object, smacks of
wanting to give SCO everything it wants to the detriment of everyone else.
That, or he's already decided that SCO isn't going into bankruptcy, and is
giving them lots of rope to hang them with. I'm only estimating 5% probability
of that scenario.
[ Reply to This | # ]
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| Authored by: The Mad Hatter r on Wednesday, October 24 2007 @ 10:42 PM EDT |
I would suspect that the judge is delighted to have an offer of any sort on the
table. It means that there will be some money to distribute to the creditors.
From memory Novell has filed to get the Utah litigation reopened. It's possible
that the judge has signed the authorization for a hearing, which is scheduled
for the same day as another hearing in the BK case, for the express reason of
getting all of the players to jump in fast. Maybe this sucker can be settled
quickly - maybe there will be massive opposition. But since most of the
principals were planning to be there anyway, it makes sense to do it then.
Besides - even though the World+Dog thinks that TSCOG is the greatest bunch of
thieves every, the judge has to go by the evidence. As of now they still haven't
shown him their true colors.
---
Wayne
http://sourceforge.net/projects/twgs-toolkit/
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| Authored by: Khym Chanur on Thursday, October 25 2007 @ 12:23 AM EDT |
According to the proposed APA:
Me Inc. shall receive 75%
of up to $0.5m, $0.5m, $1.0m, $1.0m, $1.5m,
$1.5m for
any sales by Purchaser in each of the following six, 6-month
periods after
close, respectively, of (a) the Hipcheck produce
line1, and (b) Me
Inc Mobile2. Sales targets
will be non-guaranteed. Purchaser will
own the Hipcheck IP, and Me
Inc. shall have an unrestricted, perpetual, fully
paid up,
royalty-free, source code license to the technology, with the
unlimited
right to create and own derivative works subject to a
non-competition agreement
to protect the operating system market.
Seller will own the Me Inc Mobile IP,
and Purchaser shall have an
unrestricted, perpetual, fully paid up,
royalty-free, source code
license to the technology, with the unlimited right to
create and own
derivative works subject to a non-competition agreement to
protect the
non-operating system market. Seller will own the IP and
Purchaser
shall have a reseller agreement for these products. Purchaser
shall
be granted at court order warrants for a 10 percent interest in the Me
Inc
business, vesting upon achievement of half the
threshold
amounts.
1 Monitoring IT systems via the mobile
phone.
2 Calendaring, collaboration
application.
So for the Me/Hipcheck portion of the deal
SCO gets some portion of the $10 million in cash (the other portion buying
out their Linux litigation) plus (at most) a potential $6 million
spread over three years, at the cost of getting a smaller market segment due to
the non-compete agreements. And the APA doesn't give any hints as to what the
non-compete agreements will be like. I know nothing about bankruptcy laws, but
I would think that reducing potential market share by an unknown amount isn't
something that a trustee would like if s/he was looking to make a company
solvent again. ---
Give a man a match, and he'll be warm for a minute,
but set him on fire, and he'll be warm for the rest of his life. (Paraphrased
from Terry Pratchett) [ Reply to This | # ]
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| Authored by: Erwan on Thursday, October 25 2007 @ 01:17 AM EDT |
We'll all be waiting for the reports.
---
Erwan[ Reply to This | # ]
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| Authored by: sproggit on Thursday, October 25 2007 @ 01:45 AM EDT |
Can we just go back to this question for a moment please?
Thinkgin back to Judge Kimball's August 10 ruling (was it really *that* long
ago?) we have a Court decision that Novell and not SCO own the copyrights to
Unix.
SCO have not yet disputed that finding.
Unless I landed on the wrong planet this morning... the bankruptcy court does
not have the authority to ignore Judge Kimball's finding and allow SCO to sell
something that they don't own.
So what could SCO be selling? Their valuation does seem a trifle high for a few
used desks and PCs, right?
I think the answer to this question was referenced at least once by Darl
McBride, when he was interviewed shortly after that August 10 ruling. I can't
remember precisely what he said, and as this would be a Darl quote I can't be
bothered to go look it up, but it was something to the effect that, "The
Court did find that we own all rights to that code we have added to Unixware
from the moment we bought the business from Novell."
So this gets really, really interesting.
I think we can concede Darl's point as he stated it above. Every line of
*original* code [and not something copied in from Open Source applications] that
his engineers added to Unixware after the purchase date would be intellectual
property belonging to SCO.
But the key question then becomes: how much of Unixware was re-written?
Because, to put it simply, if SCO rewrote 10% of the original Unixware codebase,
then that's all they own. What's more, Novell will surely make them prove it.
And unlike the wonders of the millions of lines of code IBM was alleged to add
to Linux, in this case we have two closed-source code-bases. Novell would have a
copy of one [we hope] which would be the pre-sale copy. SCO would have another,
a post-sale copy. We should be able to perform a 'diff' and figure out what SCO
really added.
Suppose for the sake of this discussion that they added a new screen handler and
a new printer driver socket [the stub code into which printer drivers connect].
What value would this have, in isolation, without the underlying Operating
System (i.e. the bit that Novell owns)?
Answer: not a lot.
So I'd expect the smoke-and-mirrors to be brought out again and set up in this
bankruptcy court.
But of course this time around it's almost a case of the boot being on the other
foot, since SCO must surely *have* to show their lines of code to the bankruptcy
court in order to demonstrate that they have an asset to sell... I make this
assertion purely because I can't believe that Novell are going to sit idly by
and let SCO try and sell something which belongs to Novell. Especially when
Novell's contract with SCO (the original APA) expressely considered this
eventuality and made provision for it.
So I see a number of possibilities here.
1. It's possible tha this is "pay-off" time for Darl as thanks for a
job well done. The parties involved in this whole debacle are now getting ready
to drop some cash on Darl as appreciation. For that to appear legitimate, SCO
and Darl need to "talk up" the value of their assets.
2. This is Darl's parachute and has been planned for a time. The names involved
here seem to be common and to be known to Darl from earlier encounters. So he
might have come up with a plan to sell his "Me, Inc" business to a
friendly VC company and then to pop up a year from now selling mobile services.
Or pop up a year from now selling his mobile services business to a large,
Redmond-based software company.
3. This is pass-the-baton time and our much-suspected but to date un-proven
behind-the-scenes puppetmaster now wants to move the "Threat To Linux"
story on to another proxy combatant with provable reserves of cash and let them
spend some a couple of years attacking Linux before moving on to Puppet No. 3.
And so on.
I suspect that the truth is that all 3 of the above are wrong, but contain
little threads of what's about to happen.
Anyway, to get back to the original reason for this post... I think we
definitely need to consider that SCO might have little to offer for sale outside
of Me, Inc [purchase with Microsoft money...] and whatever lines of code they
added to Unixware since they did the deal with Novell.
The more I look at this, the more I cannot help but suspect that Me, Inc might
have been Darl's pay-off.[ Reply to This | # ]
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| Authored by: Anonymous on Thursday, October 25 2007 @ 02:38 AM EDT |
If SCO wants to sell its assets, then SCO obviously does not want to continue
its
business - the so-called Unix business.
Therefore, why should SCO be allowed to continue in Chapter 11?
The judge should look at this and immediately turn the bankruptcy into a
Chapter 7 bankruptcy. At that time, SCO can sell its assets to pay its
creditors.[ Reply to This | # ]
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| Authored by: Ian Al on Thursday, October 25 2007 @ 04:54 AM EDT |
SCOG told the Utah court dealing with the Novell case that it had no plans to go
bankrupt. No, none at all. We're here until the end of the litigation, they
said.
Novell just told the bankruptcy court that they had no plans whatever to pull a
fast one.
I'm interested to see what happens next!
---
Regards
Ian Al
Linux: Genuine Advantage[ Reply to This | # ]
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| Authored by: Cyrock on Thursday, October 25 2007 @ 08:40 AM EDT |
Does not Novell have the Right of First Refusal on Change of Control? Can they
stop the sale if they so choose?[ Reply to This | # ]
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| Authored by: Anonymous on Thursday, October 25 2007 @ 11:58 AM EDT |
There's been a lot of confusion in the posts. To simplify, even though SCO has
been determined NOT to own the UNIX copyrights, as they did not transfer in the
Novell-Santa Cruz APA, it still remains true that Santa Cruz/SCO did buy
"the UNIX business" as described in the APA, and what they did buy,
they normally could sell -- but it has been clarified that the 'business' does
not include the UNIX copyrights, merely licenses.
So they could sell the rights that DID convey to SCO/Santa Cruz under the APA,
except where defaults would have limited those rights, pursuant to the terms of
the APA.
But what SCO cannot do, if they were in a true Ch.7 situation, is to shield off
funds, gained from selling assets, from the creditors -- as they are trying to
do by the creation of the "litigation fund".
So the question is, would Ch 11 allow what Ch 7 would not? The logic would be
that the $10M is being used to reorganize their business. But -- they are
SELLING their business, including even selling the future of their litigation
business (the SCOsource rights) !! How can you sell your business and claim to
be 'reorganizing' it?
In effect, they will be telling the court that their remaining
"business" is keeping 2 lawsuits alive -- namely, Novell and IBM. Is
that sufficient as a 'business plan' to keep them in Ch 11 and not in Ch 7? It
would seem not.
Therefore they SHOULD be forced to conduct their affairs in accordance with the
principles of Ch 7, not Ch 11, as long as they are already admitting that they
are 'liquidating' their real business. That means no 'special funds' isolating
funds from the creditors, and means that this gambit would have to fail.[ Reply to This | # ]
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| Authored by: mattflaschen on Sunday, October 28 2007 @ 06:14 AM EDT |
Bowman says, "Tanner also does agreed-upon attest procedures work for The
Canopy Group, which may be related to the Debtors' Utah landlord, Canopy
Properties, Inc. Taner does not believe that its audits and agreed-upon attest
procedures for the entities described above constitutes a confict of interest or
impairs its disinterestedness."
Of course, the Canopy Group used to be SCO's parent company. It doesn't sound
like Bowman knows exactly what he's getting into.[ Reply to This | # ]
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