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| SCO's 8K About the Chapter 11 Trustee & A Change of Control Agreement |
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Saturday, August 08 2009 @ 12:57 PM EDT
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SCO has filed an 8K regarding the appointment of a Chapter 11 trustee, and it answers one of our questions:Pursuant to the Bankruptcy Code, and subject to the supervision and approval of the Bankruptcy Court, the Chapter 11 Trustee will have, upon appointment, authority over the Debtors’ assets and affairs and the future course of the Debtors’ litigation against Novell, IBM, et al. So there you have it. That's what it means.
But the 8K also includes a pleasant benefit for Ken Nielsen, who just testified on July 27th on SCO's behalf in the bankruptcy hearing.
What he testified to was that SCO had filed incorrect financial information with the court, actually, I find from reading the transcript. So that may explain why we could never make the MORs add up. On August 3rd, SCO entered into a change of control agreement, whereby Nielsen agrees not to leave in the event of a threatened change in control, only if it actually happens, and SCO promises that if he's still there at such an event, any stock, stock options or restricted stock that would have vested if he continued with the company will vest immediately even on a change of control. My cynical brain, remembering all the raises and appointments to higher office that Sandy Gupta and Jean Acheson enjoyed, has decided that a sure way to get a benefit from SCO is to be needed to testify on SCO's behalf. The 8K says this change of control agreement is similar to one they did with their other executives, and in fact in 2004, here it is. The beneficiaries were Darl McBride, Bert Young, but he's left, Christopher Sontag, who also left, Jeff Hunsaker, and Ryan Tibbitts.
Here's the text of the new 8K:
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Item 1.03 Bankruptcy or Receivership.
On September 14, 2007, The SCO Group, Inc. and its wholly owned subsidiary, SCO Operations, Inc. (collectively, the “Debtors”), filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Debtors’ Chapter 11 cases are being jointly administered under Case No. 07-11337(KG).
On July 27, 2009, the Bankruptcy Court held a hearing and took evidence on cross-motions consisting of (a) the Debtor’s Motion for the Sale of Property Outside the Ordinary Course of Business Free and Clear of Interest and for Approval of Assumption and Assignment of Executory Contracts and Unexpired Leases in Conjunction with Sale (the “Sale Motion”), and (b) the Motions of Novell, IBM and the Office of the United States Trustee for conversion of Debtors’ reorganization under Chapter 11 to a liquidation proceeding under Chapter 7 of the Bankruptcy Code (collectively, the “Conversion Motions”).
On August 5, 2009, the Bankruptcy Court issued its Memorandum Opinion, and denied all of the Conversion Motions and the Sale Motion. Instead, the Bankruptcy Court opted to appoint a Chapter 11 Trustee, and entered an Order directing the Office of the United States Trustee to do so. Pursuant to this Order, the Office of the United States Trustee will select, and the Bankruptcy Court shall thereafter consider and approve, a Chapter 11 Trustee. Pursuant to the Bankruptcy Code, and subject to the supervision and approval of the Bankruptcy Court, the Chapter 11 Trustee will have, upon appointment, authority over the Debtors’ assets and affairs and the future course of the Debtors’ litigation against Novell, IBM, et al.
A copy of the Memorandum Opinion is attached hereto as Exhibit 99.1
Item 5.02 Departure of Directors or Certain Offficers; Election of Directors; Appointment of Certain Officers, Compensatory Arrangements of Certain Officers.
On August 3, 2009, The SCO Group, Inc. (the “Company”) entered into a Change in Control Agreement (the “Agreement”) with Kenneth R. Nielsen, Chief Financial Officer of the Company. Other than the name of Mr. Nielsen and the address of Mr. Nielsen, the Agreement is substantially identical to the Change in Control Agreements entered into with other executive officers of the Company.
Pursuant to the terms of the Agreement, Mr. Nielsen agrees that he will not voluntarily leave the employ of the Company in the event any individual, corporation, partnership, company or other entity takes certain steps to effect a Change in Control (as defined in the Agreement) of the Company, until the attempt to effect a Change in Control has terminated, or until a Change in Control occurs.
If Mr. Nielsen is still employed by the Company when a Change in Control occurs, any stock, stock option or restricted stock granted to Mr. Nielsen by the Company that would have become vested upon continued employment by Mr. Nielsen shall immediately vest in full and become exercisable notwithstanding any provision to the contrary of such grant and shall remain exercisable until it expires or terminates in accordance with its terms.
Mr. Nielsen shall be solely responsible for any taxes that arise or become due pursuant to the acceleration of vesting that occurs pursuant to the Agreement.
The Company’s form of Change in Control Agreement is attached to the Current Report on Form 8-K as Exhibit 99.1, which was filed on December 16, 2004.
ITEM 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit 99.1 Memorandum Opinion of the United States Bankruptcy Court for the District of Delaware Dated August 5, 2009.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: August 6, 2009
THE SCO GROUP, INC.
By:
Name: /s/ Kenneth R. Nielsen
Kenneth R. Nielsen
Title: Chief Financial Officer
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| Authored by: Laomedon on Saturday, August 08 2009 @ 01:02 PM EDT |
Yet he testified first (on July 27th), then got the change of control agreement
on Aug 3rd.
Maybe the testifying stressed him so much he threatened to quit?[ Reply to This | # ]
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| Authored by: ankylosaurus on Saturday, August 08 2009 @ 01:03 PM EDT |
Using 'mistake --> correct' in the title helps.
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The Dinosaur with a Club at the End of its Tail[ Reply to This | # ]
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| Authored by: ankylosaurus on Saturday, August 08 2009 @ 01:04 PM EDT |
Any discussions not related to the main article go here. Please make links
clickable - thanks.
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The Dinosaur with a Club at the End of its Tail[ Reply to This | # ]
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| Authored by: ankylosaurus on Saturday, August 08 2009 @ 01:06 PM EDT |
Discussions about the news picks on the Groklaw home page go here. Please
remember to clearly identify the news pick you are discussing.
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The Dinosaur with a Club at the End of its Tail[ Reply to This | # ]
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| Authored by: rfrazier on Saturday, August 08 2009 @ 01:08 PM EDT |
I was wondering who pays for the trustee. Reading the sidebar article,
"How, Why, and When to Seek the Appointment of a Chapter 11 Trustee",
it appears that a creditor with a secured debt against the debtor may have to
pay, especially if the creditor asked for a trustee. Perhaps this is why Novell
didn't ask for this "in the alternative".
Best wishes,
Bob
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| Authored by: nsomos on Saturday, August 08 2009 @ 01:37 PM EDT |
I am guessing, and I hope someone corrects me if I should
be wrong, but if sufficiently stinky and bad dirty laundry
were to come forth, the chapter 11 trustee could undo
the results of any of these "change in control" agreements
if it seemed proper and correct for them to do so.
If they are explicitly able to go back 90 days BEFORE the
bankruptcy filing, (and in some cases even further) then
surely these things going on right now, if improper, could
also be addressed by the chapter 11 trustee.
This perhaps may be even more of a carrot or a stick
than continued employment, to ensure full, accurate,
complete and prompt responses to financial questions.[ Reply to This | # ]
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| Authored by: KayZee on Saturday, August 08 2009 @ 01:48 PM EDT |
Do the bankruptcy laws state a time frame for the appointment to take place?
Before the appointment takes effect, who is in control? Are there protections
in place?
[ Reply to This | # ]
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| Authored by: Jim Olsen on Saturday, August 08 2009 @ 02:36 PM EDT |
Please correct me if I'm wrong, but if all he gets is SCO stock, then what's the
big deal? Of course, when SCO's ship comes in, he will profit greatly from this
new agreement. (To teh moon!)
But in all seriousness, once the trustee exposes the lawsuit scam, it seems to
me that all that SCO stock will be so much wallpaper, and the stock options will
be another withered dream.
[ Reply to This | # ]
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| Authored by: Anonymous on Saturday, August 08 2009 @ 02:37 PM EDT |
I just want to make sure this is memorialized.
On or about 3 August 2009, EDGAR (Sec.gov) was updated with
a series of stock option awards. I seem to recall 6-8
individual stock options. I believe these were form S-8
"Securities to be offered to employees in employee benefit
plans", though I may be wrong.
I looked at them at the time and noted that in general each
director received 10,000 shares + 15,000 more, for an
aggregate of 25,000 shares at an exercise price of $0.13.
These are the individual I recall:
Ralph J. Yarro III
R. Duff Thompson
Darcy G. Mott
Daniel W. Campbell
Omar T. Leeman
J.Kent Millington"
The standout award was to Kenneth Ray Nielsen
Interim Chief Financial Officer and CEO of SCO Germany.
He received 150,000 shares, also at an exercise price of
$0.13-14.
However, when I went to check these awards on the 6th of
August, they had disappeared. I am certain I saw the full
text on the 3rd. But I forgot to download a copy. I am not
sure I've ever noticed a filing that was just deleted.
Typically if a filing is wrong, it stays, and an amended
filing is made to correct it.
I wonder if the board quickly withdrew the stock options
when a Trustee was named, because it would look like an
obvious asset grab, being filed days before the Trustee is
named.
Anyway, does anyone else recall the filings from 3 Aug 2009?
Did anyone grab a copy?[ Reply to This | # ]
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| Authored by: Chris Lingard on Saturday, August 08 2009 @ 03:50 PM EDT |
Something has been at the back of my mind during recent articles; and I
have finally found it. See this article
Change of Control Agreement & Hollands On the Stock from
December 16 2004.
Therefore this becomes effective on appointment of
a trustee; and the value becomes a claim on the estate. It will no doubt be for
millions or billions.
Could this be the final ironic twist; that
the appointment of the trustee causes total bankruptcy?
[ Reply to This | # ]
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| Authored by: clemenstimpler on Saturday, August 08 2009 @ 04:48 PM EDT |
A very banal question: Should we read this statement as an indication that SCO
does not intend to appeal the order of Judge Gross?
S.[ Reply to This | # ]
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| Authored by: Anonymous on Saturday, August 08 2009 @ 05:00 PM EDT |
"the Chapter 11 Trustee will have... authority over the... future course of
the Debtors’ litigation against Novell, IBM, et al."
So, even without a Chapter 7 conversion, we could finally see the end of this
madness?
I'm actually allowing myself to breathe a sigh of relief.[ Reply to This | # ]
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| Authored by: Anonymous on Saturday, August 08 2009 @ 08:31 PM EDT |
We all know SCO's game (for whatever underlying reasons) is to delay, delay,
delay as long as possible.
Supposing they continue to have things go their way in terms of ... nothing
happening short of chapter 7...
How long can they last with the money they've got left to burn through?
I'm now convinced that this sad saga will never ever be resolved by the courts,
except when the checks start bouncing, and an emergency chapter 7 motion is
filed by the trustee. (Even then I wonder if Judge Gross would let it sit for a
few weeks.)[ Reply to This | # ]
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| Authored by: GriffMG on Monday, August 10 2009 @ 04:08 AM EDT |
Obviously myself, although I don't fit the respected Judge Gross's demanding
criteria, I like to think I could bring a little uncommon sense to the
proceedings.
The first things I would do would be to find, it is actually still there at all,
all the remaining money and then try and sell the so-called mobility business as
it's just a distraction and my guess is that F-C would probably be interested.
After that...
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Keep B-) ing[ Reply to This | # ]
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| Authored by: Anonymous on Monday, August 10 2009 @ 07:48 AM EDT |
With all of the research IBM performed during their discovery prior to the last
hearing, it sounds like there's a treasure trove of information available on
SCO's finances already.
Does the trustee have access to any of it, and if not, is it just a matter of
IBM handing over all discovery to the trustee?[ Reply to This | # ]
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