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SCO Wants to Pay/Reimburse People Mo' Money
Wednesday, December 19 2007 @ 08:02 PM EST

SCO is on a roll. Now it has filed a motion to amend [PDF] its earlier, granted, motion [PDF] authorizing it to pay pre-petition employees and independent contractors a certain amount per month in the ordinary course of business. You'll recall that the US Trustee's Office asked for caps to be established. It seems the caps are too low now in SCO's estimation, and SCO needs to pay them mo' money or they might quit:
11. If the Debtors cannot pay these amounts, certain Employees may terminate their employment with the Debtors at a time when the workforce has already been steadily resigning and the Debtors are dealing with fiscal year-end issues.

Sounds dire indeed. SCO now realizes it didn't ask for a high enough cap for business expenses. It has received more expense reimbursement requests from folks (SCO doesn't say from whom exactly, employees or contractors or both) for pre-petition business expenses, so SCO asks that the court lift the cap on expenses to $47,000, as opposed to the $15,000 cap established before. Heavens to Betsy. That's more than tripling the cap. How could SCO not have known previously about this kind of disparity?

Then there's the independent contractors. SCO was authorized to pay them up to $10,950, up to an aggregate amount for all pre-petition contractors of $50,000. Well, that's not enough, they say. They need the cap to be $57,000 a month.

Who are these folks who will walk if SCO doesn't pay them, I wonder? Employees or independent contractors? If the latter, are they programmers? Accountants? Executives? They have hired post-petition accounting temps, but this is talking about pre-petition. Or are we talking Bert Young and Mike Olson again? Not the temp CFO, I don't think. There will be a hearing, and I guess we'll find out then.

If SCO's talking about Young and Olson, they already quit, so losing them is not a worry. It's why they are now contractors, and they are leaving shortly anyway, or so SCO told the court. If they can earn that much a month and incur expenses to that level, well... maybe in Vegas. And if we're talking about pre-petition independent contractors who are coding for SCO, as mentioned in the 341 Creditors' Meeting, I don't care how much pizza and soda you buy, you probably can't spend that much in a single month.

The docket filings:

279 - Filed & Entered: 12/19/2007
Motion to Amend (B)
Docket Text: Motion to Amend Debtors' Motion to (I) Amend Certain Amounts of Payments Authorized Pursuant to the Employee Wage Order and (II) Authorize the Payment of the Amended Amounts to Certain Employees Filed by The SCO Group, Inc.. Hearing scheduled for 1/8/2008 at 10:00 AM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 12/28/2007. (Attachments: # (1) Notice # (2) Proposed Form of Order # (3) Certificate of Service and Service List) (Werkheiser, Rachel)


  


SCO Wants to Pay/Reimburse People Mo' Money | 87 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections Here, Please
Authored by: TheBlueSkyRanger on Wednesday, December 19 2007 @ 08:05 PM EST
Dobre utka,
The Blue Sky Ranger

[ Reply to This | # ]

Off Topic Here, Please
Authored by: TheBlueSkyRanger on Wednesday, December 19 2007 @ 08:06 PM EST
Dobre utka,
The Blue Sky Ranger

[ Reply to This | # ]

Newspick Discussion Here, Please
Authored by: TheBlueSkyRanger on Wednesday, December 19 2007 @ 08:07 PM EST
Dobre utka,
The Blue Sky Ranger

[ Reply to This | # ]

That's more than tripling the cap
Authored by: Yossarian on Wednesday, December 19 2007 @ 08:20 PM EST
Which means that SCO will be happy with double.

(The idea is simple: ask for triple and meet the
creditors half way.)

[ Reply to This | # ]

Heavens...
Authored by: jbeadle on Wednesday, December 19 2007 @ 09:42 PM EST

Heavens to Betsy.

PJ - Shouldn't that be "Heavens to Murgatroid"??

-jb

[ Reply to This | # ]

SCO Wants to Pay/Reimburse People Mo' Money
Authored by: Anonymous on Wednesday, December 19 2007 @ 09:47 PM EST
The situations on the legal front and the revenue base were miscalculated. Why
should anyone be surprised that the expense side of the business could not be
accurately predicted.

How could SCOG be expected to operate their business without the revenue that
would be generated if every Linux contributor, developer and user would just
pay. Even if only IBM would just pay SCOG the billions Darl estimated it is
owed, all of SCOG's problems would disappear.

[ Reply to This | # ]

Might just be 3-4 contract programmers
Authored by: Anonymous on Wednesday, December 19 2007 @ 09:55 PM EST
I don't know what Utah rates are, but $57k/month will just cover the cost of 3-4
high skill systems programmers most places. There are plenty of people who work
for less, but they're not very skilled and working for SCO would require a
significant premium. So it might be just 2 people.

rhb

[ Reply to This | # ]

GRAVY TRAIN THREATENS TO QUIT!
Authored by: kawabago on Wednesday, December 19 2007 @ 10:13 PM EST
It seems to me if everyone at SCO quit it would solve quite a few problems. I
guess at this point they have to stick around and fester in a last desperate
grasp at earnest.

[ Reply to This | # ]

SCO Wants to Pay/Reimburse People Mo' Money
Authored by: kurtwall on Wednesday, December 19 2007 @ 10:31 PM EST
11. If the Debtors cannot pay these amounts, certain Employees may terminate their employment with the Debtors at a time when the workforce has already been steadily resigning and the Debtors are dealing with fiscal year-end issues.
As the HR saying goes, people don't leave jobs, they leave managers. Or, in this case, executives.

[ Reply to This | # ]

How could SCOG not have known about the disparity?
Authored by: Anonymous on Wednesday, December 19 2007 @ 10:46 PM EST
A better question might be: How could they know, they're INCOMPETENT. They have
botched every thing they have touched - technical, business, legal, personal.
I'd say "professional" too but the only pros there are professional
conmen.

The court would be smart to start looking at these things not only as the scam
and ripoff that they clearly are, but also as a sign that there is NO hope this
company will every recover from the incompetence and fraud. Time for Chapter 7.

[ Reply to This | # ]

One-time only (not per month) caps
Authored by: E-man on Wednesday, December 19 2007 @ 10:54 PM EST
The way I read the motion, I think all of the caps are one-time only (not
monthly). I think it was just a matter the SCO had bills coming in due to things
that happened shortly before filing, and simply needed permission to pay those
bills. SCO simply underestimated the total bills that would come in for
contractors' wages and eployees' business expenses.

How could they do that? Well, their new comptroller, Jean Acheson, didn't seem
to have much understanding of what was going on when she testified on October
18.

It wouldn't make sense for anything to be monthly, if you think about it. It's
all pre-filing, so the period would have to end when they filed for bankruptcy
on September 14th. When would it start, though?

I also disagree with what PJ said in parenthesis here: "It [SCO] has
received more expense reimbursement requests from folks (SCO doesn't say from
whom exactly, employees or contractors or both)". In paragraphs 4, 5 and 6
it's clear that the old $15,000 cap and new $47,000 cap was for Eployees's
business expenses. For example, in paragraph 4, it says: "buisness expenses
incurred by Employees".

[ Reply to This | # ]

Phantom employees?
Authored by: SpaceLifeForm on Wednesday, December 19 2007 @ 11:25 PM EST
Smell. Fish.


---

You are being MICROattacked, from various angles, in a SOFT manner.

[ Reply to This | # ]

If theyr'e steadily resigning
Authored by: moz1959 on Thursday, December 20 2007 @ 12:00 AM EST
Then there must be all of those released wage payments that they can
re-apportion to the ones who remain! They don't need more money ;-)

[ Reply to This | # ]

VEGAS - SCO Wants to Pay/Reimburse People Mo' Money
Authored by: Anonymous on Thursday, December 20 2007 @ 08:11 AM EST
"If they can earn that much a month and incur expenses to that level,
well... maybe in Vegas."

The point is they are used to this level of payments...

Why do you think they had to file for bankruptcy? Because they were a well
managed company?

There is a mind set that you have to spend money to make money, and if you have
to go into debt spending that money, that's ok because you will make up for it
with increased earnings in the future.

This is true to a limit. But if people get carried away with the spend money
part, there is no way you will make up for it in the future.

[ Reply to This | # ]

Independant contractors get wages?
Authored by: Anonymous on Thursday, December 20 2007 @ 08:13 AM EST
Why do they refer to the payments to independant contractors as wages? They are
fees for services rendered, not wages.

In researching things about the labor and tax laws here in the US a number of
years ago, I found various references that said that only employees get paid
"wages", and that independant contractors get paid fees. If they were
paid wages, then they are employees, and the employer is obligated to withhold
income taxes, Social Security, and Medicare taxes, as well as to pay the
"employer matching" Social Security and Medicare taxes, and issuue a
W-2 tax form to them at the end of the year. They are also obligated to provide
benefits to all employees equally, so they should have been providing health
care coverage, offering a 401K plan, etc. just like they were offering to their
regular employees.

When I have done work in the past as an independant contractor, I was paid my
fee for services rendered, and I had to pay my own self employed matching Social
Security and Medicare taxes and I received a 1099-Misc form at the end of the
year instead of a W-2.

Check your IRS form 1040 when you fill it out in a month or two. The Line
labelled "Wages, Tips and other compensation" also says "Attach
form(s) W-2". Income that you received via form 1099-Misc should go on the
line labelled "Other income", or if you have set yourself up as a
business for your contracting work, it should go on the line labelled
"Business income (or loss)".

I know that the legal system has its own vocabulary and that in legalese words
may have totally different meanings from their "ordinaary daily
meaning", but the federal government specifically defines wages as money
paid by an employer to an employee, and specifically does not allow fees pait to
an indepoendant contractor to be called wages.

[ Reply to This | # ]

SCO Wants to Pay/Reimburse People Mo' Money
Authored by: Anonymous on Thursday, December 20 2007 @ 02:28 PM EST
I would expect the U.S. trustee to ask for an itemized list, to be reviewed
before approval is granted. They don't seem interested in trusting SCO not over
state their needs.

Dan

[ Reply to This | # ]

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