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Herb Jackson Files Objection to Motions to Convert/Dismiss
Tuesday, June 09 2009 @ 02:27 AM EDT

Herb Jackson of Renaissance Ventures must be the last loyal SCO soldier.

He's been marching in step with SCO's dreams since 2003, and here he is six years later, like a straggling but still fanatically loyal Japanese soldier from World War II who hasn't been told that the war is over, or has been told but refuses to believe it, still living in a cave on Guam or in the jungles of the Philippines, shooting at anything that moves. Someone needs to fly in his former commanding officer to let Jackson know the fight really is over.

Just kidding around. But it's true that he has filed an objection to the various motions to convert SCO's Chapter 11 cases to Chapter 7, a letter to the court. You remember Mr. Jackson, I'm sure. His company published a report in 2003 predicting that IBM would surely buy SCO to make the litigation stop. It also said there was a market for SCO's shared libraries. So you might consider Jackson's track record in the prediction business, when evaluating his current projections. Renaissance Ventures and "affiliated investors" have owned around 2 percent of SCO since 2003, the letter reveals. They had a lawyer -- I wonder who? -- look at SCO's claims, and they decided its claims have merit. To this very day, they think investing in SCO is reasonable.

Here's the docket entry:

06/05/2009 - 783 - Objection to Motion To Convert Chapter 11 Cases to Chapter 7. (Herb Jacobs, Managing Director). (related document(s) 750 , 751 , 753 ) Filed by Renaissance Ventures, LLC (BMT) (Entered: 06/08/2009)

Here's part of that 2003 Renaissance Ventures report:
We believe management's forecasted $10 million of SCOsource revenue in 2Q represents near-term settlement of possible license violations in arrears (related to heretofore unlicensed use of the SCOsource shared libraries) from one or more large vendors of Linux solutions, but we are unable to glean more specifics at this time. . . .

SCO management also stated . . . that the vast majority of interactions with customers and other software vendors with respect to the SCOsource initiative were positive. Our view is that lumpy, and possibly large, bookings of SCOsource license fees will continue for several quarters while these negotiated settlements of prior license violations in arrears work their way through the pipeline. SCO's resulting balance sheet should soon look a lot prettier, though we doubt the market will value such lumpy SCOsource fees as part of a consistent and predictable earnings stream -- until all or most SCOsource arrearages are cleared and these license fees become part of normalized product revenue.. . .

We currently estimate the net present value of SCOsource 'Extraordinary Items' (arrearages settlements related to prior license violations . . . to be $35.8 million or $3.18 per share, exclusive of the company's current cash generating status and its earnings power based on current and new products.

Funny, huh? SCOsource died a horrible death, AutoZone and Daimler Chrysler paid them nothing to date, and SCO is currently on life support, you might say, and that's simply because no one actually needs Unix libraries to switch to Linux. They never did and they never will. So because Jackson didn't have the tech right, it threw off his projected economic figures. That must be very distressing, if you invested heavily in SCO. What's 2 percent of SCO worth nowadays?

In talking about SCO's threat to IBM that it would revoke IBM's license, there was this prediction:

At the end of SCO's 100-day fuse on SCO’s contractual cure, on June 13, 2003, SCO has the specific authority per the license agreement to revoke IBM’s AIX/UNIX licenses and require IBM to return or destroy all copies of its software products subject to the license. We believe the aforementioned contractual cure would be upheld by the court and mandated upon IBM, and would then wreak havoc on IBM's large corporate customers bringing serious injury to IBM's business reputation and customer relationships, unless the matter is settled prior to trial. We believe the business risk to IBM is too high. Therefore, we believe IBM will settle the case prior to trial.
Obviously that prediction didn't come true either. I don't know who the lawyer was they used to analyze SCO's claims, but something went very wrong.

Did it bother him that the marketplace would be thrown into chaos because of SCO? After all, one of SCO's arguments in opposition to the motions to convert is that it would be disruptive to SCO's customers. On the contrary. Renaissance Ventures saw it as a business opportunity for SCO:

One possible outcome of the IBM lawsuit is the death of Linux, in which case, we believe, SCO owns the bulk of the intellectual property -- the 'root of the UNIX tree' -- for the world's dominant, hardened enterprise operating system. Certainly software markets would be in disarray, but given the practical alternative to unplugging the lights, we believe a worst-case scenario of the world abandoning Linux and flocking back to UNIX would not be so bad for SCO.
That's one way to compete. Your money or your life as your business plan.

He wasn't exactly correct in his predictions, was he? I mention that, because his objection letter to the court paints what I'd describe as a rather rosy picture of SCO's future. He seems to think the appeals court will definitely rule SCO's way. I'm starting to wonder if they think the fix is in.

The name Herb Jackson resurfaced in 2007 in an itemized Berger Singerman's bill. That was during the scurrying about trying to get the York deal done. Remember this? It's a screenshot from page 18 of that bill:

Herb Jackson *at* SCO? I've always wondered what that meant.

Anyway, he sent his letter to the court, with a CC to SCO and Joseph J. McMahon, Jr., the lawyer handling this case for the US Trustee's Office. Jackson remains loyal, but what he writes is, to put it kindly, hyperbole at best. Here's the creepy part of the letter that has me wondering why SCOfolk seem so certain the appeals court will help them out:

This ruling will likely clear up a great deal of uncertainty in the information technology industry with respect to core Unix technology ownership and whether final adjudication might synch with widespread industry belief and business practices between the body of licensees prior to 2003, both in the US and internationally. This underscores the importance of this litigation and the value of its final resolution beyond just the parties of claimants and shareholders....

A 10th Circuit ruling in favor of SCO would validate the merits of SCO's intellectual property litigation versus all parties, possibly negate the majority of creditors' claims in these consolidated cases and lead to the greatest economic return to all stakeholders.

Accordingly we strongly oppose the efforts to convert SCO's Chapter 11 cases to Chapter 7 or any other plan of liquidation prior to the ruling by the 10th Circuit Court of Appeals. If the appellate court rules favorably to SCO, we or other investors known to us may consider providing additional funding to enable SCO to grow its business and continue pursuing its substantial claims in order to best maximize shareholder value.

"May consider"? When will he know? Time to hop off the fence, I'd say, if they intend to provide funds, since later may be too late. Not that I care. Just saying this is mighty vague.

As for his upbeat predictions, even if SCO wins something on appeal, all it can win is the right to go back to Utah and try its case in front of a jury. That's the relief it is asking for. That doesn't mean the jury wouldn't agree with the judge in the end. It's happened before. SCO cited a case in its Response where that happened, actually, the IFPC case [PDF], which you can read all about in the previous article. I still can't believe SCO cited that case, because the court ruled that a speculative lawsuit wasn't enough to pin a bankrupt's hopes on. I think two footnotes in that ruling answer Jackson eloquently:

4 "However honest in its efforts the debtor may be, and however sincere its motives, the District Court is not bound to clog its docket with visionary or impracticable schemes for resuscitation." Tennessee Pub. Co. v. American Nat. Bank, 299 U.S. 18, 22, 57 S.Ct. 85, 87 (1936).

5 A reorganization plan under chapter 11 must be more than a nebulous speculative venture and must have a realistic chance of success which would lead to rehabilitation, and if outside financing is needed, it must be clearly in sight. In re K.C. Marsh Co., Inc., 12 B.R. 401 (Bankr. D. Mass. 1981). The Bankruptcy Code does not guarantee successful reorganization, nor does it provide a framework within which the debtor may indefinitely operate; rather, it only provides a breathing period for the debtor to seek to reorganize. In re Jones, 115 B.R. 351 (Bankr. N.D. Fla. 1990).

If he plans on funding more litigation, he'd best put his wallet on the table now, so it can be "clearly in sight".

And on what basis does he assume that the appeals court will be a "final" resolution. You know as well as I do that if SCO loses the appeal, they won't just drop it. Neither will Novell, for that matter. They will ask for an en banc rehearing or petition the Supreme Court, don't you think? This case won't be over for a long, long time.

But that doesn't mean there is uncertainty in the marketplace. SCO lost that battle years ago, and although Jackson seems not to have been clued in, that FUD war was over long ago. Tell him, somebody. His side lost.


  


Herb Jackson Files Objection to Motions to Convert/Dismiss | 116 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Not unreasonable
Authored by: Anonymous on Tuesday, June 09 2009 @ 02:40 AM EDT
After reading this, I would agree with the strategy of Mr. Jackson. If the 10th
circuit overturns Judge Kimball, which given all indications, is likely to
happen, then he knows whether his case continues to have legs. Why would he
sink money into SCO just before the 10th circuit ruling only to have it go
nowhere with a chapter 7 ruling. If it were my money, I'd do the same thing.

[ Reply to This | # ]

Herb Jackson Files Objection to Motions to Convert/Dismiss
Authored by: wvhillbilly on Tuesday, June 09 2009 @ 02:49 AM EDT
Well, if it doesn't happen, he could try selling the stock certificates for
wallpaper. </sarcasm>

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

[ Reply to This | # ]

OT - Off topic thread starts here
Authored by: Totosplatz on Tuesday, June 09 2009 @ 02:59 AM EDT
Please make links clicky

---
Greetings from Zhuhai, Guangdong, China; or Portland, Oregon, USA (location
varies).

All the best to one and all.

[ Reply to This | # ]

Corrections!
Authored by: Just_Bri_Thanks on Tuesday, June 09 2009 @ 03:39 AM EDT
And please put the nature of the mistake in the title of your reply!

---
Bri. Just Bri. Thank you.
(With a long i sound.)
Without qualification, certification,
exception, or (hopefully) bias.

[ Reply to This | # ]

News Picks discussions.
Authored by: Just_Bri_Thanks on Tuesday, June 09 2009 @ 03:41 AM EDT
URLs clickable please, if appropriate. Instructions in the red text when you
reply.

---
Bri. Just Bri. Thank you.
(With a long i sound.)
Without qualification, certification,
exception, or (hopefully) bias.

[ Reply to This | # ]

Herb Jackson Files Objection to Motions to Convert/Dismiss
Authored by: dio gratia on Tuesday, June 09 2009 @ 04:15 AM EDT
At todays close, 2 percent of SCO's stock is worth approximately $50,000. The
point being the Renaissance Venture's investors don't have a lot left to lose.
They're already down half a million (2003 Caldera offering at $1.28).

[ Reply to This | # ]

What a brave fellow he is
Authored by: Anonymous on Tuesday, June 09 2009 @ 05:54 AM EDT
Asking the court to put other creditors' money where his mouth is.

[ Reply to This | # ]

Buying SCO stock is reasonable
Authored by: Anonymous on Tuesday, June 09 2009 @ 06:51 AM EDT
If you feel you really need a tax write off ...

If that is the case, please let me know ... I can still be claimed as a
dependant.

[ Reply to This | # ]

My prediction
Authored by: Yossarian on Tuesday, June 09 2009 @ 07:18 AM EDT
>"This case won't be over for a long, long time."

My prediction is that in a couple of months, after some SCO
delays, the court will appoint a trustee to run SCO. The
trustee will settle all claims, fast, then liquidate SCO.

A year from now SCO will be liquidated and the only litigation
that will be left will be IBM vs. some SCO officers.

[ Reply to This | # ]

Typical VCs
Authored by: digger53 on Tuesday, June 09 2009 @ 08:16 AM EDT
This is the attitude and practice that has brought the world economy down. They
don't care about right and wrong, if people lose their jobs, homes, or
everything. It is all about making a fast buck for themselves.

Had SCO won, they'd have been trumpeting "Might makes right! and "Vae
victis!" (Woe to the vanquished!) How pathetically they whine now.

[ Reply to This | # ]

Herb Jackson Files Objection to Motions to Convert/Dismiss
Authored by: NigelWhitley on Tuesday, June 09 2009 @ 09:19 AM EDT
Although the objection is copied to Mr McMahon, the letter itself makes no
specific reference to the US Trustee's Office or its representative. Reading
through it, one might come to believe that only parties involved in litigation
with SCO (specifically IBM and Novell) had asked for conversion to Chapter 7. In
fact, of course, IBM and Novell only filed their motions after the US Trustee
had unilaterally reached the conclusion that conversion or dismissal is timely.

Curiously, SCO's brief takes a parallel view, that IBM and Novell are doing this
to avoid their impending doom then puts its hand over its ears with regard to
the US Trustee's motion. Do SCO and Mr Jackson believe that Judge Gross will
simply throw out the US Trustee's motion if they are not persuaded by IBM and
Novell? If conversion to Chapter 7 took place would it be inevitable that the
cases would be settled before the appeal ruling is published? Could a Trustee
choose to address the rest of the business, which is clearly failing under
present management, and await the ruling before deciding on any settlement.

The fundamental problem here is what happens after the appeal ruling is
published. Mr Jackson only mentions the possibility of investment if the appeal
is successful. In other words, they may be willing to carry on funding the
litigation lottery in the hope of recouping some of their losses. Or someone
else may be but not Mr Jackson. Or maybe nobody will invest even if the appeal
is successful. But Mr Jackson would like the court to let SCO keep spending
money anyway, even though IMHO it will run out long before any jury trial is
heard given the current rate of diminution. And if the appeal is lost (now
there's a genuine likelihood) then no investment seems likely to come forth and
the money spent from now until then has been wasted.

I believe the US Trustee has looked at the amount of money SCO has and how much
money it needs to pursue its litigation dream and calculated a gulf exists into
which the company will fall, regardless of the outcome of the appeal. A viable
business plan was needed to avoid that yawning chasm but SCO's efforts at
producing one have been for comedy value only. Without some way of staunching
the flow SCO will simply run out of money and no amount of fast-talking or
motion-filing can hide that simple fact.

That's why SCO and Mr Jackson prefer to pretend that the US Trustee didn't
initiate this phase of proceedings - they can do the sums too but hope that
someone out there has the bucks but not the brains. Spread the FUD that the
conversion motions are a ploy because IBM and Novell are worried about the
appeal and hope someone believes it enough to invest.

And they would have gotten away with it too if it wasn't for that pesky US
Trustee (with apologies to Scooby Doo).
-------------------------
Nigel Whitley

[ Reply to This | # ]

Positive reactions to SCOsource...
Authored by: nsomos on Tuesday, June 09 2009 @ 11:41 AM EDT
Herb writes
"SCO management also stated . . . that the vast majority of
interactions with customers and other software vendors with
respect to the SCOsource initiative were positive."

SCOg management failed to reveal that the reactions were that
folk were positive they would never send extortion money to
SCOg. It is a positive reaction ...

The fact of how few fell for this scam, is proof of how
much SCOg overstated the 'positive' reaction.

[ Reply to This | # ]

False Paupers
Authored by: webster on Tuesday, June 09 2009 @ 12:20 PM EDT
..
Jackson is a die-hard FUDster. He was going to make millions destroying Linux
with litigation. They did not care about the reality of the code, they were
going to make a reality of litigation and scare everyone to pay up or abandon
Linux. This is of course why the Monopoly funded it.

The appeal will not help them any more than did the original litigious assault.
It is merely procedural. They get to start over, but only after a
reconsideration en banc, maybe an appeal to the SCOTUS. If they win all that,
they then get to ask a jury if the APA means that Novell should NOW give them
the copyrights. Even the Court of Appeals tipped their hand that copyrights
didn't pass.

The Court of Appeals doesn't want to get into picking and choosing witnesses
particularly after the trial judge ruled them out but considered them any way.
None of them can say anything about negotiating and drafting the APA. SCO is
looking at a one-sided trial. Remember at this trial they will have to stick to
old SCO arguments, and not what the Johnny-come-lately dreamer$ at new SCO
wanted to create. They also have to overcome all the various defenses of waiver
which are not part of this appeal but which would be part of any future appeal.
It looks like another six years in SCO time.

There is a fight for survival going on here. The Monopoly will do anything to
destroy a threat to its monopoly. Software companies and coders are struggling
just for a place in the trade without paying for permission from the Monopoly to
exist. Since the world has a mish-mash of laws, anything they do is permissible
somewhere. The Monopoly is above the laws of any one government. SCO couldn't
appreciate the resilience of the open source community. They were even more
surprised that some corporations stood behind them. The distributed ownership,
flexibility and creation is hard to stamp out. Litigation should have done it
but the evidence got in the way. UNIX, Linux, they sound the same. Who would
have thought that specificity would have mattered?

SCO is a bit desperate here. They must doubt that a naked PIPE Fairy will want
to come forward. So Jackson steps forward and shamelessly pleads his scheme.
What's Gross gonna do? SCO is nothing but the prospect of a settlement?
Without the threat of a jury, there will be no settlement. Does Gross want to
destroy the hope$ of SCO and its backers? Is it too much to ask for Gross to
wait for the decision on the Appeal? SCO, its backers and the PIPE Fairy are
not bankrupt. If there was anything worth saving, it could have been sold by
now.

The prospect of paying creditors and then bidding for the appeal remains is a
diminishing bet with a huge risk of liability. It might not matter. The PIPE
Fairy works in mysterious ways

If they want to keep up the FUD, they must pay now or pay soon.

~webster~



[ Reply to This | # ]

Yup, something did go very wrong!
Authored by: Anonymous on Tuesday, June 09 2009 @ 12:38 PM EDT

Caveat: The following is pure speculation on my part.

That something was in believing the snake-oil salesman combined with the very narrow listening skills of the average business man.

I don't know who the lawyer was they used to analyze SCO's claims, but something went very wrong.
Picture a meeting between McBride, his in-house Legal representation and the anonymous Lawyer. Darl:
  1. gets the lawyer to sign an appropriate NDA
  2. spouts the "millions of lines of copied code"
  3. shows the header file comparisons
  4. shows the code where both systems borrowed equally from a third source ("disguised" SCOForum code)
  5. identifies all the aforementioned examples as being the "tip of the iceburg"
  6. identified the specific clauses in the AT&T agreements that support SCOG's reading
The anonymous lawyer:
  1. has copyright law experience, but perhaps not with computer code
  2. is perhaps technically illiterate when it comes to source code
  3. is unable to verify any of the "examples of breach"
  4. is unable to verify the contractual reading of the AT&T agreements because s/he is not provided with a complete copy
  5. is suitably impressed with what s/he witnesses in the presentation
Going back to Renaisance Ventures, the anonymous lawyer reports:
    "First, let me be clear that I have no way to confirm anything provided in the presentation. The presentation was very impressive and - if correct, let me reiterate I have no way to verify - SCOG stands to make a small fortune from their lawsuit against IBM."
The representative (quite probably Herb Jackson) from Renaisance Ventures hears:
    "blah blah blah. The presentation was very impressive blah blah SCOG stands to make a blah FORTUNE from their lawsuit against IBM."
The representative then follows up with his superiors with:
    "The lawyer who examined the situation reported that s/he was very impressed with the case and SCOG stands to make a large fortune from IBM."
The superiors agree to invest some $5 Million in SCOG stock (21.59 Million shares * 2% * rough avg price $12 per share for 2003).

The representative is now in a position to have cost Renaisance Ventures some $5 Million and is possibly seeing his/her career sink with SCOG. As a result, there's possibly a strong interest in trying to help SCOG stay afloat.

I'd like to reiterate the above is pure speculation on my part and by no means the only explanation. I can think of several at the moment but am only highlighting the most likely scenario to me.

It's just a "best guess" at what might have happened from my own experiences witnessing how the average business person makes decisions on what to invest in. I suspect the meeting with McBride is very close to what actually happened. The rest is pure speculation on the driving factor that might have helped Mr. Jackson to send a letter to the Court.

RAS

[ Reply to This | # ]

Herb Jackson Files Objection to Motions to Convert/Dismiss
Authored by: Anonymous on Tuesday, June 09 2009 @ 01:53 PM EDT
Appeal to the Supreme Court.

Of course, must leave no stone un-turned to finally get the justice they
deserve.

I can't deny due process. However it is hard for me to see where any body, be
it a jury or the highest court in the land, would view the "copyrights as
necessary for the Unix business" as being a clear writing of transfering
copyrights, or why SCO would after the fact ask Novell to transfer copyrights if
they had already been transfered.

They didn't have them and they don't have them and without them any litigous
claims are moot.

[ Reply to This | # ]

Herb Jackson-- Web History shows participation in LLC with Yarro
Authored by: Anonymous on Tuesday, June 09 2009 @ 09:24 PM EDT
A 2005 comment researched an expired (2002 era) Business LLC- Atomek Universe .

The registered agent of Atomek was Matt Yarro, and at the time Herb Jackson claimed participation in that LLC. So Jackson and Yarro had business ties outside of SCO, and outside the North Carolina company Mico that both Yarro's Canopy and Jackson invested in.

The Utah Business Entity database still maintains entries for the expired LLC, and for a nominal fee Principal's names can be purchased.

[ Reply to This | # ]

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