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SCO's Chapter 11 Trustee Appointed and Approved
Tuesday, August 25 2009 @ 05:56 PM EDT

Here he is:

08/25/2009 - 898 - Appointment of Chapter 11 Trustee (Notice of Appointment of Edward N. Cahn, Esquire) Filed by United States Trustee. (McMahon Jr., Joseph) (Entered: 08/25/2009)

08/25/2009 - 899 - Motion to Approve Application of the Acting United States Trustee for Order Approving Appointment of Chapter 11 Trustee Filed by United States Trustee. (Attachments: # 1 Exhibit A -- Declaration of Edward N. Cahn, Esquire # 2 Proposed Form of Order # 3 Certificate of Service) (McMahon Jr., Joseph) (Entered: 08/25/2009)

08/25/2009 - 900 - Order Approving Appointment Of Chapter 11 Trustee. (related document(s) 898 ) Order Signed on 8/25/2009. (BMT) (Entered: 08/25/2009)

Mr. Cahn is now in charge of the SCO litigation decisions.

He's in charge, period. Mr. Cahn is an attorney, Of Counsel to Blank Rome, LLC, and was formerly a judge, which is what the bankruptcy court judge suggested:
Edward Cahn, a former chief U.S. district judge for the Eastern District of Pennsylvania, has extensive experience in the area of complex litigation. He serves a wide range of clients in matters such as:
  • corporate—shareholder actions, securities litigation
  • antitrust
  • commercial
  • alternate dispute resolution
Mr. Cahn received an honorary doctorate from Lehigh University in 2002. He is a Tresolini Lecturer in Law at Lehigh University.
He has a great face. And will *he* ever be sorry he said yes to this assignment!

Joke. Joke. But I'll bet Judge Kimball could tell him a story or two.

And there is a statement by Novell:

Novell is carefully studying the decision of the 10th Circuit Court of Appeals. We are pleased that the decision affirmed the district court’s monetary award of approximately $3M from SCO to Novell. On other issues such as ownership of the UNIX copyrights, on which SCO’s claims against Novell, IBM, and Linux users depend, the Court remanded the case for trial. Precisely what will happen next in the lawsuit remains to be seen, especially in light of the pending SCO bankruptcy and the recent court decision to appoint a Chapter 11 Trustee to take over the business affairs of the company.

Novell intends to vigorously defend the case and the interests of its Linux customers and the greater open source community. We remain confident in the ultimate outcome of the dispute.

A Groklaw member attended today's teleconference and he reports that SCOfolk claim they have a deal in the works and hope to ask the judge in the bankruptcy to reconsider the Chapter 11 trustee appointment. That surprises me not at all, but I can't imagine it happening. [Update: In fact, to clarify, I hear that what actually happened was that a caller made the suggestion, rather than it coming from SCO. They thanked him for his suggestion, but that was it. No media questions at all, by the way.] They told him already a zillion times that they were going to prevail on appeal, and now that they only partly have, but significantly not the part about the money they owe, it's less than they assured him would happen, and even when he was considering that it could 100% happen, he still appointed the trustee. He got SCO's message that they want to sue, sue, sue, and he specifically decided that he wants someone less emotionally attached to the litigation to evaluate it.

And it's now a done deal. Appointed and approved.


  


SCO's Chapter 11 Trustee Appointed and Approved | 425 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
SCO's Chapter 11 Trustee Appointed and Approved
Authored by: Anonymous on Tuesday, August 25 2009 @ 06:00 PM EDT
Welcome to the fiasco

[ Reply to This | # ]

Corrections Thread
Authored by: SirHumphrey on Tuesday, August 25 2009 @ 06:03 PM EDT
If needed.

[ Reply to This | # ]

Trusting he's hale & hearty
Authored by: Anonymous on Tuesday, August 25 2009 @ 06:05 PM EDT
He's 76, according to profiles elsewhere.

[ Reply to This | # ]

Off Topic Thread
Authored by: SirHumphrey on Tuesday, August 25 2009 @ 06:06 PM EDT
Use HTML clickies if you have them

[ Reply to This | # ]

News Picks Thread
Authored by: SirHumphrey on Tuesday, August 25 2009 @ 06:07 PM EDT
Please include the News item title

[ Reply to This | # ]

SCO's investor teleconference
Authored by: lordshipmayhem on Tuesday, August 25 2009 @ 06:09 PM EDT
So will he be heading up the investors' teleconference?

That would make for an interesting discussion...

[ Reply to This | # ]

Haiku Thread
Authored by: SirHumphrey on Tuesday, August 25 2009 @ 06:10 PM EDT
Chapter 11 Trustee appointed
Now Darl McBride
is not in charge

[ Reply to This | # ]

SCO's Chapter 11 Trustee Appointed and Approved
Authored by: Anonymous on Tuesday, August 25 2009 @ 06:11 PM EDT
What exactly does "Mr. Cahn is now in charge of the SCO
litigation decisions." mean? Does that include all SCO
litigation or just bankruptcy?


[ Reply to This | # ]

A small ray of hope
Authored by: baomike on Tuesday, August 25 2009 @ 06:13 PM EDT
IIRC Lehigh is a technical school, engineering etc.
Has some of this rubbed off ??? He may have some technical
oriented buddies, and he may need them.

[ Reply to This | # ]

SCOXQ.BK's "How we will pay back Novell's $3 Million" Thread
Authored by: SirHumphrey on Tuesday, August 25 2009 @ 06:17 PM EDT
SCOXQ.BK "management" types can give us the details here.

It will be cheaper than a press release

[ Reply to This | # ]

SCO's Chapter 11 Trustee Appointed and Approved
Authored by: tiger99 on Tuesday, August 25 2009 @ 06:28 PM EDT
Well, that has answered the question people were asking in previous threads about how long it would take for him to be approved. It seems it was the same day, and the docket numbering suggests that it was probably the same hour too.

I am guessing that nothing much will be released for public consumption until he has investigated the true status of SCO, and reports back to the court. Perhaps at that time there will be a plan to end the litigation, and liquidate the remnant of SCO?

Estimating the amount of work he will have to do suggests a timescale of weeks to months before anything much is seen to happen.

I suppose Darl will be clearing his desk in the morning.....

[ Reply to This | # ]

What's the tri-fectal?
Authored by: Anonymous on Tuesday, August 25 2009 @ 06:44 PM EDT
You know... Bad news comes in 3's:

Sco has the appelate court decision, the trustee, and now what other shoe is
left to drop?

Fire in their records office destroying Blepp's precious briefcase?

--Jpvlsmv

[ Reply to This | # ]

SCO has a deal in the works
Authored by: Anonymous on Tuesday, August 25 2009 @ 06:48 PM EDT
Well, of course they do. They've always had a deal in the works, since just
after the start of bankruptcy.

Of course, it's never been worth a hill of beans, but they've always had one.
(Specifically, the court has never been impressed with any of the deals,
especially after IBM and Novell pointed out the glaring flaws.)

I suspect that this deal will be no different. But they will wave it in front
of the court to plead for Gross to spare them from the evil trustee that will
ruin all their dreams and plans. (No, really. The trustee will in fact do
that.) I also suspect that, if it gets that far, Novell and IBM will strongly
oppose, and Gross will see yet more evidence for why the Chapter 11 trustee is
needed.

Just my guesses, though...

MSS2

[ Reply to This | # ]

A legal point that I miss
Authored by: Yossarian on Tuesday, August 25 2009 @ 07:00 PM EDT
"SCOfolk claim they have a deal in the works and hope to ask the judge in
the bankruptcy to reconsider the Chapter 11 trustee appointment."

Let's assume, for sake of argument, that SCOfolk have a real
deal. Why can't they just send the buyer/investor to talk
with the Chapter 11 trustee and conclude the deal? Why
can't the buyer meet with the Chapter 11 trustee and present
that great deal to him?

Why there has to be a Darl's signature on the deal?

[ Reply to This | # ]

Explains the Timing of the Press Conference
Authored by: darkonc on Tuesday, August 25 2009 @ 07:01 PM EDT
I'm guessing that Darl & co. were given the heads-up that the trustee was coming in today or tomorrow, and they decided that this was the last chance to get some fud in.

---
Powerful, committed communication. Touching the jewel within each person and bringing it to life..

[ Reply to This | # ]

So What Will Happen Next?
Authored by: dobbo on Tuesday, August 25 2009 @ 07:04 PM EDT

I have long since been wondering if SCO's lawyers have been advising their clients that these litigations are not worth the risk. I'm not going to say that they have no chance of winning – juries can always do the unexpected, but one needs to weigh up the potential rewards (billions if IBM did put Unix code into Linux) against the chances of winnings (has anyone got an scanning electron microscope?).

My thinking has been for some time that along came McBride to the BS&F offices singing "My company owns Unix which we bought from Novell that bought it from AT&T. AT&T's copyright notices are all over the place in the Linux OS. IBM must have put it there." So what would you say if you were BS&F? Remember you can only answer based on the evidence presented so far. You haven't read the APA yet; yes, you can see AT&T copyright notices in Linux; and your a lawyer, you have no knowledge (yet) of POSIX or any of the tech involved.

Remember when McBride first presented their "evedence" that was quickly debunked. That's when the wheels started to really come off SCO's wagon. Of course asking Novell for the copyrights to the code you've already filed suit on probably wasn't a good thing either. But these early examples all happened after BS&F had to make a decision of whether or not to take the case.

From were I sit, I think it is possible that the first people SCO didn't tell the Truth, the whole Truth and nothing but the Truth to where their own lawyers.

I'm sure Mr. Cahn will make up his own mind. But I would be surprised if someone prepared to take on the role of trustee wouldn't first listen to both McBride and BS&F. To date all we have heard from the SCO camp is that "SCO is right and the courts will prove us so". But surly BS&F have to sing from the song sheet that their client wants, even if they don't believe it themselves. So now BS&F get to give their advice to some one who doesn't have pure and absolute belief that their version of things the only one.

If Mr. Cahn moves quickly to drop these litigations (and move SCO into Chapter 7 in the process) then maybe my thinkings has been correct. I wonder if we will ever know what BS&F really think about this case internally. But if these litigations continue what does that mean? That SCO has been right all along? Or is the Law now in such a state that it isn't there for justice, but just one more tool to increase income for those that can afford the lawyers to get their own way?

Dobbo

[ Reply to This | # ]

Wait, what's that on the horizon...
Authored by: kawabago on Tuesday, August 25 2009 @ 07:13 PM EDT
I think it's a whisp of sanity blowing into Utah!

[ Reply to This | # ]

What's Your Favourite Bit of SCO Legal Evidence?
Authored by: dobbo on Tuesday, August 25 2009 @ 07:21 PM EDT

I thought now might be a good time for a bit of a poll, or a look back at the past and all the entertainment we've had over the years, whatever. After all there have been some really golden moments, which Hollywood would never dare put in a script. Maybe yours in in the list below, but feel free to add your own highlight if you wish.

  1. The MIT rocket scientists work than never saw the cold light of day, or
  2. The copyrights in Linux headers that turned out to be from code placed in the public domain as part of the POSIX standardisation, or
  3. My personal favourite: SCO: "The GPL is unconstitutional, immoral and not legal!"
    To which IBM responded with: "We've placed code we wrote in Linux that we developed, our copyright notices are still in place on that coded. As we have only ever released this code under the GPL what right did you have to distribute such?"

[ Reply to This | # ]

A pool ---SCO in Chapter 7 in one month.
Authored by: Anonymous on Tuesday, August 25 2009 @ 07:55 PM EDT
I say one month.

[ Reply to This | # ]

red dress time
Authored by: Anonymous on Tuesday, August 25 2009 @ 08:26 PM EDT
It seems to me that SCO-as-we-knew-it is now dead. Whatever emerges will
be a different company with different management. It's time to celebrate.

[ Reply to This | # ]

SCO's Chapter 11 Trustee Appointed and Approved
Authored by: Anonymous on Tuesday, August 25 2009 @ 08:43 PM EDT
Although the SCO folk were quick to put up a notice on their site about the
appeal yesterday, they are not so quick to mention the trustee today...


[ Reply to This | # ]

Move the trial venue
Authored by: Anonymous on Tuesday, August 25 2009 @ 09:12 PM EDT
to East Texas? Cattle country, and all that.
Did SCO ever have enough business there to
pull this as a stunt? I 'spose the Trustee would be allergic.

[ Reply to This | # ]

Can the appointment be appealed?
Authored by: argee on Tuesday, August 25 2009 @ 09:47 PM EDT
Before the wrath of Cahn descends on SCO, can Darl & Co.
appeal/contest the Trustee appointment? Does a notice
of appeal stop the Trustee from taking over, or does he
take over in the meantime?

I have this slight feeling that Darl, Yarro & Co are not
very pleased at all about the Trustee's appointment, and
will utilize every trick in the book to vacate it.

Where does BS&F stand? Do they help out DY&Co on this, or
do they immediately say they work for the Trustee?


---
--
argee

[ Reply to This | # ]

We missed all the fun
Authored by: relic on Tuesday, August 25 2009 @ 10:12 PM EDT
We'll never get to see the real pre-trial and trial fireworks. Such as shame.
It's been over for a long time. Actually, it was over when IBM said, "Go
ahead, sue us."

The trustee will act to preserve the creditors' money first and foremost.
Nothing will be spent unless a return is all but guaranteed. Money paid out in
variance with the Ch. 11 guidelines at the disadvantage of any or all creditors
will be returned, if it can be found.

Think about the creditors beyond Novell and IBM. There are real people out
there who are owed money by these scam artists. Some of them may be on a razor
thin line and what they finally get, if anything, could make or break them.

The trustee knows this.

He also knows that he is the trustee for all creditors, not a special few. He
is appointed by the court to protect their money from management, the
stockholders, and the board.

The company has been confiscated from their grip and will not under any form be
returned to them because the BK judge declared them legally incompetent to
manage their own affairs. That is huge!

I have dealt directly with trustees before and I can tell you, they care
absolutely nothing about linux, Unix, AIX, IBM, us, them, media, or anyone
except the creditors.

They are not bought or sold or part of anything broken. They are after real
money, not Litigation Lotto. They use a tourniquet, not a band aid. If that
still doesn't stop the bleeding, they stop the heart from beating.

Big Gambler Darl just bet all his cattle and his hat, too, and came up sevens.
You don't play with the Big Boys with a pocket full of singles.

[ Reply to This | # ]

Somewhere right now Darl is falling to his knees...
Authored by: Anonymous on Tuesday, August 25 2009 @ 10:32 PM EDT
and shaking his fist while yelling "Cahn!"

</trekreference>

[ Reply to This | # ]

I can't resist...
Authored by: Kevin Snodgrass on Tuesday, August 25 2009 @ 10:32 PM EDT
All your base are belong to me! -
Edward N. Cahn, Esquire

Maybe that should be all your "case"...

[ Reply to This | # ]

Can the Trustee get the Cattle back from Cattleback?
Authored by: Anonymous on Tuesday, August 25 2009 @ 11:33 PM EDT
I have wondered if the trustee will be able to untangle all
the wierdness that happened in bankrupcy with patents,
formation of cattleback, money shenanigans, etc.

Can any of this be undone?

Can the trustee go to the judge and say "uh, i think i found
something really smelly here, do we do something about this?"

---
Clocks
"Ita erat quando hic adveni."

[ Reply to This | # ]

The Benefit of the Doubt
Authored by: sproggit on Wednesday, August 26 2009 @ 12:25 AM EDT
I think we need to be cautious and careful with respect to these latest
developments.

One thing we need to remember is that the Court Officials - particularly the
Judge in each case, and now the Trustee - simply don't have the same luxury of
time to undertake the level of research and review that happens here on
Groklaw.

We have watched, over the years, at the way that The SCO Group has distorted the
truth, stretched the facts, apparently gamed the system in their efforts to
achieve a victory. But, to borrow the expression, out of an abundance of
caution, the legal system presents a framework that does it's best to protect
all parties. That framework is predicated on the fact that all parties approach
litigation with honorable intent. We've seen what can happen when that isn't the
case.

But we need to remember that the Trustee, himself a former judge, will not have
the years of history of this case. If he is "local" there is every
chance that he will be willing to look favourably on a local Utah company such
as SCO. I'm not suggesting inappropriate action, but merely that he would be
willing to give them the benefit of the doubt.

We've all been witness to the end result when that happens.

My hope lies with the fact that the Trustee has balanced responsibilities and
must weigh up between the needs of the business and the needs of various
creditors, which would be a step away from the previous model, where the
Debtors-In-Possession spent their way through every dime of their reserves and
continued to operate a shell of a company so that they can keep their dreams
alive.

Finally, I am interested in the note of the appeals ruling and the evaluation
the judges gave to the evidence. In looking at the content the first time
around, I felt myself persuaded in particular by Tor Braham, the external lawyer
who had drafted the documentation and been the actual individual working on
behalf of Novell. I thought his testimony gave clarity to the complexity of the
APA and it's amendments and was slightly puzzled that the Appeals Justices
didn't seem to evaluate that more closely.

Interesting stuff...

[ Reply to This | # ]

Probably the first death caused ...
Authored by: Anonymous on Wednesday, August 26 2009 @ 01:27 AM EDT
... by SCO operations.

[ Reply to This | # ]

SCO can't pay
Authored by: Anonymous on Wednesday, August 26 2009 @ 02:20 AM EDT

SCO cannot pay the $3 million awarded by the Appeal Court.

They have over $3 million in cash, but they also have bills to pay arising from the normal course of business (salaries, computer supplies, etc). They can't cover their bills AND pay Novell.

OK, that's why companies go into bankruptcy, because they can't pay their bills. But c.11 bankruptcy is to enable a company to get itself out of a hole. SCO is digging the hole deeper.

[ Reply to This | # ]

Should Groklaw be formally introduced to the trustee?
Authored by: ionic on Wednesday, August 26 2009 @ 03:10 AM EDT
PJ,
Now the trustee has beed formally appointed would it be appropriate to introduce
him to Groklaw as a convenient source of information that may counter the biased
views presented to him by the departing BoD?

To my naive mind, it would seem like a good idea to ensure he knows about this
valuable resource. If it were to happen though, a formal letter (or similar)
from yourself would probably be the only appropriate way for it to carry enough
weight to be noticed.

Any plans?

[ Reply to This | # ]

SCO's Chapter 11 Trustee Appointed and Approved; but who pays him?
Authored by: AMackenzie on Wednesday, August 26 2009 @ 03:35 AM EDT
Who pays the honourable trustee, assuming that SCO can't? Would he join the
list of creditors? Or would the USA Trustee's office guarantee his
wage/salary/fee/bill/honorarium? (What is it called, anyway?)

[ Reply to This | # ]

Key question: what will BS&F advise Cahn?
Authored by: Anonymous on Wednesday, August 26 2009 @ 03:41 AM EDT

BS&F's client is SCO.

McBride represented SCO. So if at some point BS&F had said to McBride, "We think you should give up, this is hopeless", and McBride had said, "Keep going anyway, and try to spin it out for as long as possible", BS&F would have kept going. They work for the client.

Now Cahn represents SCO. I wonder what advice BS&F is giving him.

This saga could come to an abrupt end very, very soon.

[ Reply to This | # ]

SCO's Chapter 11 Trustee Appointed and Approved
Authored by: Anonymous on Wednesday, August 26 2009 @ 05:31 AM EDT
Kimball is appealed
Cahn is appointed posthaste
McBride looks forlorn

[ Reply to This | # ]

Here, here!
Authored by: Ian Al on Wednesday, August 26 2009 @ 05:45 AM EDT
So, Edward Cahn starts his first day in his new office and asks 'OK, so what
have we got here?'.

The teaboy, eyes fixed on the tips of his trainers, replies 'Sorry, boss.
There's no here, here!'

---
Regards
Ian Al

Linux: Viri can't hear you in free space.

[ Reply to This | # ]

Timing! It's all about the timing!
Authored by: DaveJakeman on Wednesday, August 26 2009 @ 07:06 AM EDT
On the same day SCO held their teleconference to gloat over their big win on
appeal...

OK, perhaps that's a bit mean, but I feel like being mean every once in a while.
Only to the nice guys.

I wonder if Mr Cahn is any relation to Genghis?

:)

[ Reply to This | # ]

Their Karma Ran Over Their Dogma
Authored by: TheBlueSkyRanger on Wednesday, August 26 2009 @ 07:10 AM EDT
Hey, everybody!

Okay, I know everyone is upset about SCO's appeal being affirmed (well, sort of.
The money didn't change, and there was always a chance the summary judgement
about the APA would be overturned). But here's a happy thought for you.

We all want to see SCO pay for its hubris. This was a case where they were
taking advantage of people not being familiar with tech to spread FUD and make
themselves rich.

The appeal would have mattered if SCO was still in charge. They thought they
were going to lose a lot worse than they did. And that's the key: facing what
they thought was certain doom, they went Chapter 11 to shield themselves.

IBM, Novell, and the trustee basically forced Gross' hand, making it impossible
for him to NOT appoint a trustee. And now, one's in charge.

In short, SCO would not be in this mess, would still be in a position to get
money from PIPE fairies and be able to continue this at their whim...

...if they hadn't panicked and gone Chapter 11.

Of all the "hoist by their own petard" moments, that is the big one,
because it cost them control of their own actions.

There's an old Polish proverb that says, "When you resign yourself to fate,
your resignation is instantly accepted."

Dobre utka,
The Blue Sky Ranger
who is going to be laughing for quite some time to come....

[ Reply to This | # ]

Artibration
Authored by: turambar386 on Wednesday, August 26 2009 @ 08:43 AM EDT
I mentioned it in the last story and am surprised that others have not picked it
up yet, but apparently Cahn's current specialty is arbitration and mediation. I
think that this is significant and likely tells us something about the US
Trustee's thinking on how the litigation should proceed; i.e. settled, and as
quickly as possible.

My prediction is that we will see a settlement with Novell very quickly, and
with IBM and Red Hat a little while after that. It will be the terms of those
settlements that will be interesting.

[ Reply to This | # ]

Now what ... Q's about the IP
Authored by: Anonymous on Wednesday, August 26 2009 @ 09:41 AM EDT
With the appeal decision, and assuming the Trustee decides not to pursue
ligitation, I have a few questions.

1) Who actually owns the Unix IP?
2) How is this verified?
3) If SCO actually tanks, who gets that IP?
4) Where does Linux stand?

In other words, is it possible Darl can still end up with the suit simply by
purchasing the asset during liquidation?

[ Reply to This | # ]

PIPE Fairy?
Authored by: Anonymous on Wednesday, August 26 2009 @ 09:45 AM EDT
Now that the trustee is in the house, could any undue influences in this be
brought to light like the REAL Baysar dealings, MS involvement, etc?

The reason I ask is bad news comes in threes, and MS has already lost two big
cases this year, and being exposed as having played a part in this would not do
them much good. It seems that a lot of things could be coming to light that were
never meant to...

[ Reply to This | # ]

Sham Deals
Authored by: Anonymous on Wednesday, August 26 2009 @ 10:08 AM EDT
Is it possible that there are enough layers of indirection that any deal for a
SCO buyout will leave the same crew in charge? They may have to put up some
money, but they have been doing that all along. The quantity of these
"deals" bothers me.

-- Alma

[ Reply to This | # ]

If I was Trustee
Authored by: Anonymous on Wednesday, August 26 2009 @ 01:15 PM EDT
If I was the Trustee, I would want an independent analyst (not SCO, not IBM, not
Linus T.) to tell me if there were grounds for the lawsuit. (From my years of
following GROKLAW, I have an opinion that the lawsuit has always been 'much ado
about nothing'.)

Regardless of the opinion, I would meet with IBM, Novell, et al:

If there were any merit to some of the claims, I would horse trade to reduce the
liability/exposure of SCO on other issues.

I would want to know what arrangements (conditions, concessions, costs) would be
needed to withdraw from the litigation wholly or in part.

I would entertain Chapter 7 and separate encumberances from the viable part of
the UNIX business.

---
Night Flyer at work
Veritas Vincit (Truth Conquers)

[ Reply to This | # ]

Question for PJ
Authored by: DodgeRules on Wednesday, August 26 2009 @ 01:18 PM EDT
Now that the ownership of the UNIX and UnixWare copyrights is again unknown
according to the courts, what happens if SCO goes Chapter 7? If SCO is placed
into liquidation, all assets are sold off to pay the creditors. But what
happens to these assets that the courts haven't yet decided which party owns?

[ Reply to This | # ]

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