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SCO wants more time to exclusively file a reorganization plan
Friday, May 09 2008 @ 06:47 PM EDT

SCO wants even more time to file a reorganization plan. It has filed a motion asking for 90 more days, until August 11, in its Second Motion by Debtor Under Section 1121(d) For Extension of Exclusivity Deadlines [PDF]. I expect they'll probably get it, unless there is a ruling from the Utah court on SCO v. Novell before the hearing on this motion in Bankruptcy Court in Delaware.

The initial period where SCO would be allowed to exclusively come up with a plan was to end on January 12, 2008. They asked for an extension on January 2nd, and they were granted an extension until May 11 to file a chapter 11 plan and until July 11 to get acceptances. SCO filed the beginnings of a plan, but the objections that rained down on it from all quarters inspired SCO to withdraw it and rework it. And here we are, with no ruling yet from the Utah court, which in fact makes it difficult to file a plan, since SCO has no idea yet how much it has to give to Novell.

Meanwhile, SCO argues that because Novell asked for only $20 million instead of $31, they have to negotiate with Stephen Norris folks from that new and "improved position". But note the footnote, where the figures morph into quite a different picture:

3. Novell filed a proof of claim (Claim No. 146) in the principal amount of $20,906,110 and prejudgment interest of at least $10,000,000. Novell's counsel remarked to the Utah Court that it now seeks a judgment of $19,979,561. See Excerpt of May 2, 2008 Transcript (Novell's closing argument), pp. 699-701, lines 20-11 (attached as Exhibit A hereto).

And with interest that would be what? SCO seems to be assuming or hinting that because interest wasn't mentioned in the closing argument that it has disappeared from the case. I don't think that is so. If you read the transcript of the trial, Novell's attorney says they are not going after $7 million, related to one section, Section 3, of the Microsoft agreement. They do want the rest, for a total of $9,750,000. They want all of the Sun license payments, which wasn't quite the $10 million owed. Sun actually paid SCO $9,143,809. Novell also wants all the money from all the other SCOsource licenses, which comes to $1,156,110. That's where the figure of $19 + million comes from. All Novell dropped is $7 million. The rest they want, and it just turned out to add up to $19,979,561, not $24 million, and I never heard Novell drop its demand for prejudgment interest. It's in their counterclaims. So much for SCO higher math. And so much for headlines claiming that Novell dropped its claims from $37 million down to a mere $19, eh? If SCO was telling people that, it doesn't match what they tell the bankruptcy court now.

They do mention they expect a ruling from the judge in Utah within 45-60 days of the last day of trial, so that's their best guess. For what it's worth.

Here are the filings:

468 - Filed & Entered: 05/08/2008
Certificate of No Objection
Docket Text: Certificate of No Objection (No Order Required) Regarding Seventh Interim Application of Berger Singerman, P.A. for Compensation for Services and Reimbursement of Expenses, as Co-Counsel to the Debtors in Possession for the Period from March 1, 2008 through March 31, 2008 (related document(s)[447] ) Filed by The SCO Group, Inc.. (Attachments: # (1) Certificate of Service and Service List) (Werkheiser, Rachel)

469 - Filed & Entered: 05/08/2008
Certificate of No Objection
Docket Text: Certificate of No Objection (No Order Required) Regarding Fourth Monthly Fee Application of Mesirow Financial Consulting, LLC as Financial Advisors to the Debtors for Compensation and Reimbursement of Expenses for the Period from March 1, 2008 through March 31, 2008 (related document(s)[445] ) Filed by The SCO Group, Inc.. (Attachments: # (1) Certificate of Service and Service List) (Werkheiser, Rachel)

470 - Filed & Entered: 05/09/2008
Motion to Extend/Limit Exclusivity Period (B)
Docket Text: Second Motion to Extend Exclusivity Period for Filing a Chapter 11 Plan and Disclosure Statement and Solicit Votes Thereon Filed by The SCO Group, Inc.. Hearing scheduled for 6/17/2008 at 02:00 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 6/10/2008. (Attachments: # (1) Notice # (2) Exhibit A # (3) Proposed Form of Order # (4) Certificate of Service and Service List) (O'Neill, James)

  


SCO wants more time to exclusively file a reorganization plan | 302 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Off topic here
Authored by: Lazarus on Friday, May 09 2008 @ 06:58 PM EDT
You know the deal, you've been through it before.

[ Reply to This | # ]

News pick discussion
Authored by: Lazarus on Friday, May 09 2008 @ 07:00 PM EDT
Under this topic.

[ Reply to This | # ]

Corrections here
Authored by: Lazarus on Friday, May 09 2008 @ 07:02 PM EDT
To be honest, I'm really surprised I got to do this.

[ Reply to This | # ]

  • Corrections here - Authored by: Anonymous on Saturday, May 10 2008 @ 12:20 AM EDT
SCO wants more time to exclusively file a reorganization plan
Authored by: Lazarus on Friday, May 09 2008 @ 07:03 PM EDT
I'm shocked, shocked to discover that SCO is asking for more time.


Shocked!



Ok, not all that shocked.

[ Reply to This | # ]

Anyone surprised by this ...
Authored by: overshoot on Friday, May 09 2008 @ 07:06 PM EDT
please hold up your hands.

[ Reply to This | # ]

45-60 Days! That's a lot of deliberation!
Authored by: Anonymous on Friday, May 09 2008 @ 07:10 PM EDT
Is he sequestered?

Jeez, a jury would have done it in less than a day.

[ Reply to This | # ]

SCO wants more time to exclusively file a reorganization plan
Authored by: JamesK on Friday, May 09 2008 @ 07:14 PM EDT
"its Second Motion by Debtor Under Section 1121(d) For Extension of
Exclusivity Deadlines"

So, when do they request a delay in the deadline for the above? ;-)


---
If it's green and in my fridge, it's been there too long.

[ Reply to This | # ]

Too late, surely?
Authored by: Anonymous on Friday, May 09 2008 @ 07:19 PM EDT
Their exclusivity runs out before this motion can possible be approved. I'm a
student, and if I ask for an extension on an assignment after it's due it (or so
soon before it's due in that they can't possible reply in time), I get laughed
at...

Do you think Novell have a plan ready to submit? If so, they can presumably do
so before this motion is approved, and there's nothing SCO can do about it. (Of
course, at this point I believe they still have a say in whether a plan gets
approved or not, but they seem to think stopping anyone else even filing a plan
is important.)

It seems like a reasonable motion, but the thing is: Nothing has changed since
they picked May 11th. If they wanted longer, they should have asked for longer
the first time.

[ Reply to This | # ]

SCO's good faith==fully deprecated asset
Authored by: Anonymous on Friday, May 09 2008 @ 07:34 PM EDT
Do two 'fire sales' to shady investors, who have no industry standing, and without competitive bidding, really count as 'good faith?'

Is it 'good faith' to let outside parties who may be damaged by SCO's slide into Chapter 7, step in and bid by stalking horse, if only to keep the cellar door shut?

What advantage to the shareholders is it to leave Darl and his cohorts in place?

A wag might indeed say that Darl & Co. have no business remaining at the helm of SCO, given that they don't even know what they own from day to day!

[ Reply to This | # ]

SCO asks Judge Kimball to delay ruling
Authored by: Anonymous on Friday, May 09 2008 @ 07:38 PM EDT
"SCO asks Judge Kimball to delay ruling on Novell's Fourth Claim for Relief
until Oct. 1, 2008" -- now they don't go that far do they?

[ Reply to This | # ]

Norris and Robbins update website
Authored by: Anonymous on Friday, May 09 2008 @ 08:15 PM EDT
Stephen L. Norris and Utah based partner Mark Robbins update their website.

With perhaps unintentional irony, their structured Corporate loan subsidiary, a category the SCOX proposal represents, is now named "CLIP".

Next in a virtually unending series of planned, future hedge funds, Norris is now advertising


"Spartan Co-Investment Partners is a planned $1 billion dollar private equity and co-investment fund that will invest alongside successful private equity firms. Spartan's founding principals have excellent track records, led by Dennis Dammerman, former Chairman of GE Capital and Steve Norris, co-founder of The Carlyle Group. The fund will Focus on middle-market buyouts, growth capital investments and structured equity investments with a typical investment size of $50-$100 million.

Source: Spartan Fund link

[ Reply to This | # ]

Want cake and eat it too
Authored by: argee on Friday, May 09 2008 @ 09:42 PM EDT
Here is a prediction.

1. Kimball rules for Novell, allows, say, $20 million.
2. SCO writes this up in their reorganization plan, saying
SNCP is "investing $20M" to pay off Novell.
3. Instead of paying off with this money, they appeal.
3. SCO borrows or "sells off UNIX", and uses the money to
further their litigation strategy.

It seems to me that an acceptable plan should be that if
there is money made available to pay Novell, then it is
defacto acceptace of the ruling. Otherwise the reorg plan
should state: "the rulings are not acceptable" and the
money will be used to continue litigation rather than pay
off Novell ... and down the road, IBM, RedHat etc.

In other words, a reorg plan should have provisions to pay
off ALL debts, and not leave some hanging fire.




---
--
argee

[ Reply to This | # ]

Interest?
Authored by: arch_dude on Friday, May 09 2008 @ 11:36 PM EDT
If Judge Kimball rules that SCOG converted $20M of Novell's money, then that
money never belonged to SCOG and must be transferred to Novell prior to any
claim by another creditor. Fine. But what about the interest? At 7%/yr, even if
we compute it as simple interest this is >$10M. Is this interest already
Novell's money, or is it a debt owed by SCOG to Novell? By any application of
common sense, the interest in Novell's money belongs to Novell. But here, we
must consult the court of equity, not common law or common sense. What is the
status of the interest? Who rules on this issue, Judge Kimball or the BK Judge?
If the interest is Novell's money, then Novell gets $30M before any other
creditor gets anything. If the interest is currently SCOG's but is owed to
Novell, then Novell gets $20M off the top and must then join the other creditors
to get a piece of the remaining funds.

But this is actually an advantage to Novell. The $20M will probably force SCOG
into chapter 7, but the $10M debt will give Novell a majority vote on the
creditor's committee. This neatly circumvents the fudsters who had placed BSH at
the head of the creditor's committee.

[ Reply to This | # ]

SCO lies!
Authored by: rsteinmetz70112 on Saturday, May 10 2008 @ 12:05 AM EDT
While Novell seems to have trimmed their claim by about one million they have
not abandoned their claim for prejudgment interest. They explicitly state that
in their arguments.

There is no way to interpret SCO's statements as anything less than a
misrepresentation or in other word a lie.

---
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 | # ]

Perspective
Authored by: sproggit on Saturday, May 10 2008 @ 04:01 AM EDT
Although not entirely unexpected (SCO have become inseperable from "Delay,
delay, delay!" in my mind), this latest move for more delay is very
interesting.

If you just look at the dates on their own, SCO have now asked for the filing of
their reorganisation plan to be delayed by a total of 8 months [January to
August]. That's just amazing...

From a slightly different angle, consider the financial status of the company in
respect of their voluntary move into Chapter 11 last year. They filed on the eve
of their trial with Novell - in fact on September 14th, after the SCO Board of
Directors met on September 13th. So let's go back to the dates above. SCO have
just asked the bankruptcy court to allow them to postpone the filing of their
reorganization plan until August this year. In other words, barely a month
before the anniversary of their seeking Chapter 11 protection in the first
place. That's effectively an entire year of delay, delay, delay. On the bright
side, at least Darl isn't spouting off about owning millions of lines of Linux
code any more.

Now a different perspective: shortly after filing for Chapter 11, SCO wrote a
much more gloomy 10Q (September 18th last year) to the SEC in which they stated
that there was significant doubt that they could remain as a going concern in
the event that Novell was awarded all or a significant part of the sum that
Novell had originally sought from SCO. I'm pretty sure that it was in the order
of $30MM.

So as discussed elsewhere in posts subordinate to this article, Novell have
asked for $19MM and change and of course interest accrued on the monies
illegally held by (conversion) by SCO. Its too early to see how the ruling will
go from Judge Kimball, as it's not clear whether Novell's switch to a very
precise amount simplifies or complicates matters from the perspective of his
ruling. Obviously Judge Kimball wants to write something that will survive all
appeal attempts.


From yet another perspective, let's consider the fact that since September 14th
last year - i.e. the onset of bankruptcy - SCO have added legal fees to their
expense base. One supposes that these have been offset by the reduction of the
cost of salaries that were being paid to technicians and software engineers that
actually wrote and supported the software that used to be SCO's business, before
they became a litigation company. It's actually quite difficult to tell whether
their month-on-month operating expenses are now higher or lower than they were
last September.

Now, SCO's voluntary pre-petition form, back in September last year, stated that
their assets were $14,800,000 and their debts at the time were $7,500,000.
Irrespective of anything else [excepting of course a miracle in sales revenue]
we can see from these numbers that a finding for Novell of $7,300,000 or more
will force SCO into a Chapter 7 fire sale. It may be interesting for us to go
back and look at the financial breakdown of the Novell Claim for $19MM to see
which parts of their claim Judge Kimball would have to uphold in order to total
up to that $7,300,000 number.


However we look at this - and it's a shame to the extent that we can't see the
actual numbers more clearly - the SCO business must be running on vapor. I have
no idea what remit or interest Judge Gross is going to have in this aspect of
the case, but it would be nice to think that he is going to have the presence of
mind to ask SCO's management to demonstrate - via a clear [and audited]
financial projection - that they are confident they will still be in business by
August of this year.




[ Reply to This | # ]

More Delay - SCO wants more time to exclusively file a reorganization plan
Authored by: Anonymous on Saturday, May 10 2008 @ 05:38 AM EDT
I remember posters predicting this in response to an earlier Groklaw article, so
I'm not surprised.

Now we know the judge already ruled that Novell had the right to order SCO to
stop the IBM, and Autozone suits. If the judge rules that SCO Source is also
System V money then that should enable Novell to put the kabosh on the SCO
Source litigation.

A good Novell would get the money from SCO and turn around and tell the SCO
Source purchasers here is your money back. SCO didn't have the authority to do
this and there is no Unix in Linux. Maybe withholding something for their
trouble in getting the money from SCO as a handling fee.

So what is left for SCO to work with to get the money from some lender? They
still have the business of collecting from Unix Licensees and remitting to
Novell. The only new money they can make is from selling new Unixware licenses,
and possibly the mee product.

By the way, there is or was a company Mee Industries owned by Thomas Mee, who
had a frost protection product that consisted of a patented super fine spray
nozzle which would spray a mist on Citrus Orchards. The water would freeze
instead of the crop. It works for a certain range of temperatures, but if it
gets too cold, the crop is still damaged.

Apparently there was a lawsuit that the product didn't protect a crop, and the
business faltered. Haven't received a statement in decades, and I can't find
the stock certificate.

Anyway, to get back to SCO, they can always say to a prospective lender that
they have a good case for an appeal and the judge gets reversed on appeals a
lot, so lend us the money and you will hit the jackpot.

Noticed that they are looking over seas now for the money source, where the
investor is less knowledgeable about our legal system. (Nigerian scam in
reverse?)

Ignorance is bliss.

Just as an exercise I took a paragraph from above and ran it through Bable Fish
to get a hint of how distorted it might get for someone in a foreign country to
use a tool like that to read the Groklaw pages to find out what was really
happening in this SCO saga. I couldn't find an Arabic translation, so I chose
Chinese Simple, then translated it back.

This is what I got:

"3. Novell filed away has sued for damages the proof (to request 146) in
the main considerable amount $2.0,906,11 billion and the prejudgment interest at
least $1.0,000, billion. The Novell advice Utah court stated, it now seeks
judges $19,979,561. Sees also the excerpt on May 2, 2008 the transcript (Novell
closure argument), page 699-701, 20-11 (attaches achievement to display A to
this)."

It is an interesting way of handling currency conversion. That should really
help a foreign investor make an intelligent decision.

[ Reply to This | # ]

SCO wants more time to exclusively file a reorganization plan
Authored by: Anonymous on Saturday, May 10 2008 @ 08:15 AM EDT
In the April 2 Hearing, Mr. Spector told Hon. Judge K. Gross he hoped to have
the new deal in by May 11th.

"... Nevertheless, we are hopeful we can stick to the deadlines that we
have in the exclusivity, which I believe is May 11th. Have a plan in by then.
I'm hoping that if -- if our discussions go as well as they have, we'll be able
to meet those deadlines and get it in."

So, why are SCOG now asking for another three months of exclusivity? Just about
one month ago May 11th was supposed to be looking good! What has changed that
was not sufficiently anticipatable on April 2?

The only issue was due diligence, for which Mr. Spector said he might have to
ask for another month.

"The only loose end here would be the due diligence deadline. We don't want
-- I don't want -- I don't want to come back and have looose ends. I don't want
to say, well, its subject to due diligence now when we come here for the
disclosure hearing. So, I might have to say can we have another month so we
don't have that contingency overlooking us --- overhanging us when we come to
the disclosure hearing. On -- on scheduling, that's my only comment."

I do hope Trustee and Judge will say to SCOG, now, enough is enough, you will
make a monkey of this court no more.

[ Reply to This | # ]

SCO wants more time to exclusively file a reorganization plan
Authored by: wvhillbilly on Saturday, May 10 2008 @ 11:11 AM EDT
NO!!!

They've had way too much time already!

---
Trusted computing:
It's not about, "Can you trust your computer?"
It's all about, "Can your computer trust you?"

[ Reply to This | # ]

SCOG motion to grant permission to take an overlong time to file an overlength motion to ...
Authored by: Anonymous on Saturday, May 10 2008 @ 12:50 PM EDT

[ Reply to This | # ]

What if someone else files a plan before this motion is heard?
Authored by: Anonymous on Saturday, May 10 2008 @ 02:12 PM EDT
Here are some of the current facts as I understand them in relation to the
period of SCO's exclusivity to file a plan:

1. The current SCO exclusivity ends Sunday, May 11.

2. Any of the creditors or the US attorney is theoretically free to file their
own reorganization plan any time on or after Monday, May 12.

3. This current motion to extend their period of exclusivity isn't going to be
heard until June 17th.

I now have a couple questions for the experts here to respond to:

1. Is there anything in the rules that keeps the other parties form filing a
plan before the June 17th hearing on this motion? If so, doesn't that give SCO
an "automatic extension' until the hearing, and isn't that unfair
(prejudiced against) the other parties?

2. If the answer to the first part of question 1 above is no, and someone does
file an alternate plan in the interim, then what happens if Judge Gross grants
this motion to extend after the hearing? Do the other parties have to withdraw
their plans? Can they be sanctioned for submitting an alternate plan during the
exclusivity period, even though the exclusivity period hadn't officially been
extended yet?

It just seems like SCO is somehow giving themselves an automatic extension until
the June 17th hearing.

[ Reply to This | # ]

Fiduciary?
Authored by: Anonymous on Saturday, May 10 2008 @ 06:57 PM EDT
In previous filings, the US Trustee has raised the possibility of appointing an
independent trustee to oversee SCO's financing.

I'm wondering if SCO telling us they need more time to come up with a viable
reorganzation plan will impact the decision on whether a trustee is warranted?

[ Reply to This | # ]

  • Viable? - Authored by: Anonymous on Saturday, May 10 2008 @ 07:04 PM EDT
SCO wants more time to exclusively file a reorganization plan
Authored by: Ted Powell on Saturday, May 10 2008 @ 10:11 PM EDT
The SCO Group theme song, by an appropriately-named group.

---
MS-OOXML is a dead parrot nailed to the ISO/IEC perch.

[ Reply to This | # ]

SCO wants more time to exclusively file a reorganization plan
Authored by: Ian Al on Sunday, May 11 2008 @ 04:34 AM EDT
I read on IV that, because the motion was filed before the previous deadline
expired then the period of exclusivity continues until the judge rules.

I am certain the judge will not rule any time soon although it will be quick
compared with the district courts. However, I have only just realised what the
most likely turn of events will be.

I think SCOG will be told to meet him in his chambers, probably on the afternoon
of 14th May and he will rule, sua sponte, that they stay at the court with the
bigger box of coloured crayons until they have finished the plan, or go straight
to Chapter 7.

---
Regards
Ian Al

When nothing else makes sense, use Linux.

[ Reply to This | # ]

SCO wants more time to exclusively file a reorganization plan
Authored by: Anonymous on Sunday, May 11 2008 @ 09:46 AM EDT
Well.. it's the chord too. You flat the III for minor, and B is not III of any
A triad.

[ Reply to This | # ]

  • Huh???? n/t - Authored by: Anonymous on Monday, May 12 2008 @ 01:55 PM EDT
Best Guess????
Authored by: Anonymous on Monday, May 12 2008 @ 03:55 PM EDT
They do mention they expect a ruling from the judge in Utah within 45-60 days of the last day of trial, so that's their best guess. For what it's worth.
My best guess is that "45-60 days" was chosen to justify the 90-day extension. With some minor caveats, it makes sense to give them time after the ruling to create a plan so SCO needed to make the estimated time as long as possible to give them the most time to "plan".

The minot caveats: 1) SCO isn't planning to make a plan. 2) SCO can't plan their way out of a paper bag. 3) After 90 days the only plan is "we have nothing -- give it to everyone".

[ Reply to This | # ]
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