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| SCO Files a Ch. 11 Plan, a Disclosure Statement, and Wants to Pay York's Expenses |
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Saturday, March 01 2008 @ 03:53 PM EST
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SCO has now filed its
Chapter 11 Plan of Reorganization [Part 2, both PDFs], along with a
Disclosure Statement [PDF]. The hearing is set for April 2. Also they have filed a
Motion for Authority to Pay an Expense Reimbursement to York Capital Management [PDF]. SCO seems to be having a ball distributing all the money they can prior to the Utah trial in April. They are so bold. That's what makes them so fun to watch. Here's why SCO wants to pay York. They have a *moral* duty, they feel. Did you ever expect 'SCO' and 'moral' to show up in the same sentence? I confess I did not. I think we can now say that we've seen everything: 4. SCO believes that as a business and moral matter SCO should make the $50,000 payment to York under the Term Sheet (which it did finalize) or the $150,000 payment to York under the terms of the Asset Purchase Agreement (which was virtually completed at the time SCO and York abandoned the transaction. Don't you love it? Wait. Don't the executives have to do what's best for the everlovin' shareholders? And I thought York only got paid if the deal actually happened. Say, speaking of asset purchase agreements, Novell probably feels SCO has a business and moral obligation -- nay, a legal duty, forsooth -- to pay Novell for license fees SCO agreed to pay under an earlier APA that was actually signed in a deal that was actually finalized in all particulars.
If you wish to review the York deal particulars, here's the list:
Here are all the new filings:
365 - Filed & Entered: 02/27/2008
Order on Motion to Appear pro hac vice
Docket Text: Order Granting Motion for Admission pro hac vice of (Kim B. Andres, Esq.) (Related Doc # [363]) Order Signed on 2/27/2008. (JSJ, )
366 - Filed & Entered: 02/27/2008
Certificate of No Objection
Docket Text: Certificate of No Objection (No Order Required) Regarding Fourth Interim Application of Tanner LC for Compensation for Services and Reimbursement of Expenses as Accountants to the Debtors for the Period from January 5, 2008 through February 1, 2008 (related document(s)[321] ) Filed by The SCO Group, Inc.. (Attachments: # (1) Certificate of Service and Service List) (Werkheiser, Rachel)
367 - Filed & Entered: 02/29/2008
Motion to Authorize (B)
Docket Text: Motion to Authorize /Debtors' Motion for Authority to Pay an Expense Reimbursement to York Capital Management Filed by The SCO Group, Inc.. Hearing scheduled for 4/18/2008 at 01:30 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 4/11/2008. (Attachments: # (1) Notice # (2) Proposed Form of Order # (3) Certificate of Service and Service List) (O'Neill, James)
368 - Filed & Entered: 02/29/2008
Chapter 11 Plan
Docket Text: Chapter 11 Plan of Reorganization Debtors' Joint Plan of Reorganization Filed by The SCO Group, Inc. (Attachments: # (1) Exhibit A# (2) Certificate of Service and Service List) (Jones, Laura Davis)
369 - Filed & Entered: 02/29/2008
Disclosure Statement
Docket Text: Disclosure Statement in Connection with Debtors' Joint Plan of Reorganization (related document(s)[368] ) Filed by The SCO Group, Inc. (Attachments: # (1)
Disclosure Statement - Part 2 # (2)
Exhibits # (3) Certificate of Service and Service List) (Jones, Laura Davis)
370 - Filed & Entered: 02/29/2008
Notice of Hearing (B)
Docket Text: Notice of Hearing on Approval of Disclosure Statement in Connection with Debtors' Joint Plan of Reorganization (related document(s)[369] ) Filed by The SCO Group, Inc.. Hearing scheduled for 4/2/2008 at 02:00 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 3/26/2008. (Attachments: # (1) Certificate of Service and Service List) (Jones, Laura Davis)
***********************************
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
________________________
In re:
The SCO GROUP, INC. et al.,
1
Debtors.
_______________________
Chapter 11
Case No. 07-11337 (KG)
(Jointly Administered)
Hearing Date: April 18, 2008 at 1:30 p.m. Prevailing Eastern Time
Objection Deadline: April 11, 2008 at 4:00 p.m. Prevailing Eastern Time
DEBTORS' MOTION FOR AUTHORITY TO PAY AN
EXPENSE REIMBURSEMENT TO YORK CAPITAL MANAGEMENT
The SCO Group, Inc. and SCO Operations, Inc. (the "Debtors") request authority
to pay York Capital Management ("York") up to $150,000. As grounds thereof, the Debtors
state the following:
1. On October 23, 2007, the Debtors filed the 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 (D.E. No. 149),
attaching a copy of a term sheet (the "Term Sheet") by and between The SCO Group, Inc.
("SCO") and York providing for, among other things, SCO to pay to York, subject to Court
approval, up to $50,000 in reimbursable expenses to be incurred by York in connection with the
transactions contemplated by the Term Sheet.
2. On November 16, 2007, the Debtors filed a Notice of Filing of Asset
Purchase Agreement Between the Debtors and York Capital Management ("Asset Purchase
Agreement") (D.E. No. 215). Under the terms of the Asset Purchase Agreement, SCO was
required to pay to York, subject to Court approval, up to $150,000 in reimbursable expenses to
be incurred by York in connection with the transactions contemplated by the Asset Purchase
Agreement.
3. Unfortunately, the negotiations between SCO and York did not reach a
mutually satisfactory conclusion, the transaction failed, and the Court never entered an Order
approving the transaction or any of the documents that contemplated the transaction.
4. SCO believes that as a business and moral matter SCO should make the
$50,000 payment to York under the Term Sheet (which it did finalize) or the $150,000 payment
to York under the terms of the Asset Purchase Agreement (which was virtually completed at the
time SCO and York abandoned the transaction).
5. At previous hearings before this Court, counsel for SCO informed the
Court that it had made the commitments referred to herein.
6. The Debtors recognize that, pursuant to 11 U.S.C. § 363(b) payments such
as the proposed payment to York, as payments outside the ordinary course of business, may be
made, if at all, only with Court approval. Moreover, the Debtors understand that post-petition
payments made outside the ordinary course of business and without prior Court approval are
subject to being recovered pursuant to 11 U.S.C. § 549.
7. The Debtors are concerned that obtaining potential investors or buyers
might be made more difficult if all the risk of due diligence is borne by the investor or buyer. If
SCO does not honor this commitment, future negotiations may be made more difficult.
8. Therefore, the Debtors now seek authority from this Court to make a
payment to York under the terms of the now-abandoned Term Sheet and Asset Purchase
Agreement.
[remainder of page intentionally left blank)
WHEREFORE, the Debtor respectfully requests that this Court enter an order:
A. Granting the Debtors authority to pay to York up to $150,000, and
B. Granting such other and further relief as it deems just and proper.
Dated: February 29,2008
PACHULSKI STANG ZIEHL & JONES LLP
Laura Davis Jones (Bar No. 2436)
James E. O'Neill (Bar No. 4042)
Rachel Lowy Werkheiser (Bar No. 3753)
[address, phone, fax, email]
and
BERGER SINGERMAN, P.A.
Paul Steven Singerman
Arthur J. Spector
Grace E. Robson
[address, phone, fax]
and
[address, phone, fax, email]
Co-Counsel for the Debtors and Debtors-in-Possession
1The last four digits of the taxpayer identification number for The SCO Group, Inc. are 2823. The last four digits of
the taxpayer identification number for SCO Operations, Inc. are 7393. The address for both Debtors is 355 South
520 West, Lindon, Utah 84042.
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| Authored by: tyche on Saturday, March 01 2008 @ 04:16 PM EST |
Tyche
---
"The Truth shall Make Ye Fret"
"TRUTH", Terry Pratchett[ Reply to This | # ]
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| Authored by: Anonymous on Saturday, March 01 2008 @ 04:17 PM EST |
Too bad I'm Anon --
else I'd file the Corrections, OT and NP headings.
In the meantime I've skimmed the documents earlier and enjoyed several amusing
turns of phrase:
A favorite was the one you note PJ, about tSCOG getting a socail and moral
conscience.
That's doubly amusing when in a later filing, they describe the neccesity of
moving forward with the SNCP, LLC deal, because it's in the best interest of the
creditors and STOCKHOLDERS.
-- Hmmph! SO NOW we are worried about stockholder equity, after burning through
$280M? SCO now says we hope to return roughly $0.02 to $0.05 per dollar invested
by doing a forced buy-out, after voting bonuses for all the inside players. That
kind of social conscience ... astounds me.
More great quotes below ....[ Reply to This | # ]
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| Authored by: tyche on Saturday, March 01 2008 @ 04:18 PM EST |
Tyche
---
"The Truth shall Make Ye Fret"
"TRUTH", Terry Pratchett[ Reply to This | # ]
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| Authored by: tyche on Saturday, March 01 2008 @ 04:19 PM EST |
tyche
---
"The Truth shall Make Ye Fret"
"TRUTH", Terry Pratchett[ Reply to This | # ]
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| Authored by: SilverWave on Saturday, March 01 2008 @ 05:20 PM EST |
Still laughing....
Still laughing.... :D
---
You don't need to use an Anti-Virus with Linux as thats mainly a windows thing
:)
But you can if you want to, its your choice.[ Reply to This | # ]
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| Authored by: Anonymous on Saturday, March 01 2008 @ 05:48 PM EST |
So, in the proposed chapter 11 reorg plan, what does this paragraph mean:
6.7 Disallowance of Claims. Under section 502(d) of the Bankruptcy
Code, any
Claim asserted by a Creditor shall be disallowed in its entirety if
such Creditor has received a
transfer that is voidable under the Bankruptcy Code
and has failed to surrender such transfer. If
and when the Claims asserted in
respect of the Pending Litigation become Disallowed,
Reorganized SCO shall be
able to use the remaining availability on its credit line in accordance with the
terms of the Debt financing...
What makes a transfer voidable?
I read this as saying that if Novell wins, and their claim becomes an Allowed
Claim, and SCO successfully argues that Novell has received a voidable transfer
and hasn't surrendered it, the claim may become Disallowed. So...what's a
voidable transfer?
[ Reply to This | # ]
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| Authored by: Anonymous on Saturday, March 01 2008 @ 05:49 PM EST |
SCO's motive is clear in offering to throw money at York. They are trying to
spend down their cash balance to achieve the lowest possible net balance in
their accounts -- to reach a point of maximum il-liquidity -- prior to the
Hearing in Utah on the constructive trust.
Based on the tracing rules that Judge Kimball will have to apply, that lowest
point in net cash balance will then translate into the maximum amount of SCO
cash that Judge Kimball can place into the constructive trust, because it will
be construed as the last of the actual remaining "corpus" of the
original MS and Sun payments.
That doesn't mean that Judge Kimball is otherwise limited in finding that a
significant amount of the $26M collected from Sun and MS licensing dollars
belong to Novell. But -- for any amount found to belong to Novell that is above
the amount of the constructive trust, Novell will be owed the money, yes, but
that debt won't have any protected or special status, and Novell will be forced
to just get in line as another BK creditor -- even though that money would have
been adjudged to be Novell's money, effectively stolen by SCO, and never
extended to SCO as goods or credit.
So -- SCO is thumbing its nose at Novell here, by offering, in net effect, to
give Novell's money to York. "If I can't have it, then YOU can't have
it", is the message from SCO.
LEXLAW[ Reply to This | # ]
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- SCO Files a Ch. 11 Plan, a Disclosure Statement, and Wants to Pay York's Expenses - Authored by: dio gratia on Saturday, March 01 2008 @ 05:58 PM EST
- SCO Files a Ch. 11 Plan, a Disclosure Statement, and Wants to Pay York's Expenses - Authored by: Anonymous on Saturday, March 01 2008 @ 10:17 PM EST
- It's time to file criminal charges. - Authored by: Anonymous on Saturday, March 01 2008 @ 11:22 PM EST
- Get out of jail card? - Authored by: Anonymous on Saturday, March 01 2008 @ 11:48 PM EST
- SCO Files a Ch. 11 Plan, a Disclosure Statement, and Wants to Pay York's Expenses - Authored by: rsteinmetz70112 on Sunday, March 02 2008 @ 08:19 AM EST
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| Authored by: Anonymous on Saturday, March 01 2008 @ 06:04 PM EST |
"Did you ever expect 'SCO' and 'moral' to show up in the same
sentence?"
Huh?
Of course!
"SCO lacks moral."
or
"The abyssmal disrespect of business ethics and the low moral standards of
the SCO group is widely known in the industry"
How many more should you need?
[ Reply to This | # ]
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| Authored by: whoever57 on Saturday, March 01 2008 @ 06:09 PM EST |
Since the negotiation of the asset purchase was done without the BK court's
approval, then surely the "moral obligation" (if such exists) should
actually be for SCOX's execs to personally pay the $50k or $150k. [ Reply to This | # ]
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| Authored by: DaveJakeman on Saturday, March 01 2008 @ 06:42 PM EST |
7. The Debtors are concerned that obtaining potential investors or
buyers might be made more difficult if all the risk of due diligence is borne by
the investor or buyer. If SCO does not honor this commitment, future
negotiations may be made more difficult.
Of course, SCO's
difficulty with future negotiations might have nothing to do with their
financial track record -- never having turned an honest dime in profits to date
-- their intention to stiff those they already owe money to (or those whose
money they have illegally converted), their reckeless habit of squandering
working capital on baseless lawsuits, generous bonus schemes for directors --
even during bankruptcy -- or their holier-than-thou "moral"
purity.
Buyer Beware!!!
Snort.
---
Monopolistic
Ignominious Corporation Requiring Office $tandard Only For Themselves [ Reply to This | # ]
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| Authored by: rand on Saturday, March 01 2008 @ 07:18 PM EST |
| "The Debtors are concerned that obtaining potential investors or buyers might be
made more difficult..."
But don't they already have another white
knight lined up
and ready to give them oodles of money?
---
The wise man is not
embarrassed or angered by lies, only disappointed. (IANAL and so forth and so
on) [ Reply to This | # ]
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| Authored by: jjon on Saturday, March 01 2008 @ 07:26 PM EST |
SCO369 Part 2, page 37:
To protect the property against the
possibility that ... Novell may obtain a judgement against SCO Group and then
aggressively seize property to collect the judgement before SCO Group could
complete the appellate process, ... the Plan provides that
...
... basically SCO's stuff still belongs to SCO's "estate"
& is protected by the bankruptcy court, but SCO can use it without any
oversight.
This lasts until SCO elects for it to end (yeah right), or
until all Novell, IBM, Red Hat and Autozone claims have become final (i.e. all
appeals exhausted). (Note that Red Hat is still stayed and there won't even be
a trial there for a LONG time).
[ Reply to This | # ]
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| Authored by: Anonymous on Saturday, March 01 2008 @ 07:31 PM EST |
You make arrangements with a Chapter 11 Debtor in Possession and there is a very
real chance they won't be followed since the person your negotiating with
doesn't actually have the power to make such arrangements. York knew what they
were getting in to and shouldn't get a penny.[ Reply to This | # ]
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| Authored by: webster on Saturday, March 01 2008 @ 08:31 PM EST |
.
The Plan of Reorganization
Reorganized SCO (Re-SCO) is going to get $5 million in Equity Financing from
SNCP. They will then pay the allowed claims and fund their Equity Interest on
the Effective Date of the Plan. They'll pay everyone by 11 days after the
Effective date.
Re-SCO will will issue new stock to the trust. The trust will hold this stock
for the Holders of Equitable Interest, the old stockholders, for their pro rata
benefit. They are also going to pay $2 million to the trust for expenses and a
distribution pro rata to the beneficiaries. They anticipate $1.5 million going
to the ex-shareholders, now beneficiaries. The beneficiaries will not feel so
beneficial since their 100% equity will immediately turn into 49%, there will be
no more SEC openness and scrutiny, and there will be no reckoning for the
hundreds of millions that have disappeared over the years.
These holders will get their pro rata trust certificates by which they will
place their hopes in safety deposit boxes. The boxes will hold the hope that
someday, exactly one year after the final order, the certificates will be
redeemed at the "Redemption Price." That price will be 16% of the net
claim if it is after SNCP has loaned $30 million, a likely prospect.
There are other payouts and guarantees in the event of an IPO, change of
majority new stock ownership, dissolution (no guarantees).
They contemplate IBM and Novell litigation. It appears the best way to get at
SCO is to revive Red Hat. There may be no provision for those attorneys and
this plan leaves them out. Red Hat should file a PSJ and ask the court to
certify it to Kimball since he is somewhat familiar with the situation.
The new guys also want Darl out on the Effective Date.
At the same time this is a plan to get out of bankruptcy, they invoke bankruptcy
jurisdiction to protect the plan afterwards. They also try to enjoin any claim
collecting. They have an eye on that constructive trust. This isn't going to
bind anyone not a party to it. It is crassly manipulating the bankruptcy court,
the SEC, a judge and a mediation. Re-SCO and SNCP are not bankrupt! Even they
realize this and put in paragraph 11.2 to try and save it. It says that other
courts are suitable if the bankruptcy court does not take jurisdiction over what
they claim above. SNCP runs the risk of getting roped into this scheme and
pierced. There's a judgment out there, the state of the copyrights are known.
If you partner with a bankrupt to do what they were doing, you might get dragged
down.
btw the proponents have a right to abort the plan up to the Effective Date.
Nothing in the plan about SNCP obligations. On to other documents.
It is inconceivable that someone would invest millions in SCO without another
agenda.
This will only happen on the Judge's schedule if at all. He should wait until
after Utah and then do the work if they put up the $35 million.[ Reply to This | # ]
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| Authored by: TropicalCoder on Saturday, March 01 2008 @ 11:44 PM EST |
Hey - did anyone notice that we are missing half the document
"369 - Filed & Entered: 02/29/2008
Disclosure Statement
Docket Text: Disclosure Statement in Connection with Debtors' Joint Plan of
Reorganization "
This PDF is truncated at page 29, where the final sentence is cut off from its
conclusion, whereas the table of contents promises us a full 64 pages. What
gives?[ Reply to This | # ]
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| Authored by: Anonymous on Sunday, March 02 2008 @ 07:13 AM EST |
| It is going to be very interesting to read what Cravath make of all of this ... [ Reply to This | # ]
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| Authored by: fudisbad on Sunday, March 02 2008 @ 07:49 AM EST |
| Some time ago, I mentioned that SCOXQ.pk paided O'Gara some time between June 15 and
the BK filing. That payment was made on 29 August 2007 (see page 71 of the
exhibits to BK #369). In the same post, I speculated that the payments were
excessive given the subscription fees on G2's website.
It appears that
SCOXQ.pk pay O'Gara quarterly, as August and November are three months apart.
---
"SCO’s failure to provide code for the methods and concepts it claims
were misappropriated is [...] a violation of this court’s orders." - Judge
Brooke Wells [ Reply to This | # ]
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| Authored by: rfrazier on Sunday, March 02 2008 @ 10:12 AM EST |
Since I'm not very knowledgeable about creative ways to handle corporate
bankruptcy, it is difficult for me to put these activities in any sort of
interesting context. Have there been deals similar to this, or is it, as one
hopes, a one off?
Best wishes,
Bob
[ Reply to This | # ]
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| Authored by: Anonymous on Monday, March 03 2008 @ 02:10 PM EST |
From the "Pending Litigation" section concerning the Autozone case in the
Disclosure Statement, docket number 369.
This litigation has been
stayed since August 2004. SCO Group and Autozone are required to file status
reports every 90 days on the IBM Litigation, Novell Litigation and Red Hat
Litigation. The last status report was filed by SCO Group on May
23,2007.
It has been many more than 90 days since May 23, 2007,
and SCO hasn not filed another report with the court in the Autozone case. Isn't
this grounds for contempt of court?[ Reply to This | # ]
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