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Berger Singerman Asks for an Order Allowing it to Pay Itself from Retainer |
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Friday, October 16 2009 @ 10:53 AM EDT
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Things are not so free and easy in SCOland, I gather, now that the Chapter 11 Trustee is running the company. Berger Singerman has filed a motion on its own behalf asking the court to please amend a prior order, the October 5, 2007 Administrative Order Establishing Procedures for Interim Monthly Compensation of Professionals, so the firm can pay itself from the retainer it has in hand. It's been doing that for a while, but it seems the Chapter 11 Trustee notices that there is no explicit allowance to use the retainer in that order. If you remember, he already signaled that he's looking into all the professional fees. So Berger Singerman would like an explicit order from the court saying it's all right to do that. The motion lists the retainer as being currently $340,536, and they need to dip into it some more because while "Debtors paid the interim monthly payments to the Movant to the best of their reasonable abilities throughout the cases", "eventually cash flow became an issue". Indeed.
I do recall the retainer being mentioned earlier. Here's the paragraph I was remembering from October 2008, a prior bill from Berger Singerman: 5. BSPA has received no payment and no promises for payment from any source for services rendered or to be rendered in any capacity whatsoever in connection with the matters covered by this Application. There is no agreement or understanding between BSPA and any other person other than the partners of BSPA for the sharing of compensation to be received for services rendered in this case. BSPA has received payments during the year prior to the Petition Date in the amount of $425,000 from the Debtors in connection with its prepetition representation of the Debtors. Such amount includes a retainer for postpetition services in the amount of $275,000. BSPA was current as of the Petition Date, subject to a final reconciliation of the amount actually expended prepetition. Upon final reconciliation of the amount actually expended prepetition, any balance remaining from the payments to the Firm was credited to the Debtors and utilized as BSPA's retainer to apply to postpetition fees and expenses pursuant to the compensation procedures approved by this Court and the Bankruptcy Code.
So, it's not that Berger Singerman was secretly doing anything. Clearly, they thought in good faith that the retainer was for the purpose. And they mentioned emailing Ryan Tibbitts about a "cost retainer for ordinary course professionals" in their first billing. But I don't see specific numbers. Exactly how much went from the pre-petition retainer to the post-petition retainer? Dorsey & Whitney also mentioned a retainer, at the November 16, 2007 hearing, but if I understand what was said, it could dip into it if it disclosed it, so others could object. Here's where the firm gave Notice of Intent to Setoff Certain Pre-Petition Fees and Expenses against Pre-Petition Retainer specifically in #352 [PDF] and the accompanying exhibits. And now that I think of it, didn't Mesirow get a $35,000 retainer too? I surely hope the Trustee is looking at that first bill, speaking of the improvidence standard.
After SCO began having cash flow issues, Berger Singerman started to dip into the retainer. And now the trustee asserts the firm should no longer do so, unless the court explicitly authorizes it: 12. However, in communications with the Movant, counsel for the Trustee has asserted that notwithstanding the Court's interim approval of the Movant's compensation for the services performed and the expenses incurred in the months of June and July, 2009, because the Interim Compensation Order does not explicitly authorize the Movant to draw down on its retainer to pay fees and costs due to it, the Movant should seek and obtain an order of this Court allowing it to draw down on its retainer. The firm says they believe they are entitled to pay from the retainer, but "out of an abundance of caution" it seeks the order of the Court allowing it to draw down on its retainer as it has become accustomed to doing. Any such payments are, it explains it understands, subject to final approval or, in the alternative, disgorgement. As we learned earlier when we were trying to understand the improvidence standard the US Trustee's Office said would be applied to Boies Schiller's bills, the court can also just reduce the amount to be paid.
So, now Berger Singerman can understand how Novell feels. It's annoying not getting money you believe is due to you, isn't it? No objections to the prior administrative order have ever been filed before, so this represents a big change. The free spending spigot of SCO litigating itself into bankruptcy has been turned down. The judge will likely authorize the payments, of course, but it does show that the party is over.
Here's the motion and accompanying exhibits:
10/15/2009 - 928 - Motion to Amend /Motion for Order Amending Administrative Order Establishing Procedures for Interim Monthly Compensation of Professionals Filed by The SCO Group, Inc.. Hearing scheduled for 11/20/2009 at 02:00 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 11/13/2009. (Attachments: # 1 Notice # 2 Proposed Form of Order # 3 Certificate of Service and Service List) (Makowski, Kathleen) (Entered: 10/15/2009)
Here's the order [PDF] referenced from October 5, 2007, and it was one of the
flurry of orders that the judge signed lickety split when the bankruptcy was first filed. There is indeed no reference to using retainers in that order. Here's the order [PDF] authorizing the retainer of Berger Singerman from that same day, and I don't see any wording about a retainer being OK to dip into in that order either.
Wouldn't it be funny if, after all that dancing on behalf of SCO, Berger Singerman could only be paid directly by SCO, and the retainer was instead disgorged to pay creditors like...um... Novell?
Update: I see Maureen O'Gara is reporting that Darl McBride is expecting to be fired shortly. I normally don't link to her, since I have in the past found her reporting to be not as reliable as I'd require to use as a source here. But I can't help but notice that in this article (http://in.sys-con.com/node/1147274) she says that SCO conducted a mock trial of SCO v. IBM. I wonder, since she has an inside track apparently, if she would be able to substantiate that assertion. I've never seen any proof of a mock trial happening, although there have been rumors. Perhaps she would be good enough tell us what law firm conducted the mock trial for SCO?
A reader points out that Berger Singerman is asking to be paid for work done on the proposed deal that the judge himself characterized [PDF] like this:
Here, the Debtors offered no evidence of the fairness of the price and, indeed, the price is highly suspect as the sale was clearly a rushed, last ditch effort to avoid the Conversion Motions. There is no evidence that the sale price is fair because it is just enough for Debtors to dismiss their cases. The terms are equally, if not more, troublesome. Debtors are retaining the Mobility business that is virtually worthless, the letter of credit to pay a Novell judgment terminates on December 31, 2009, with no guarantee that the Novell Litigation will be concluded. Further, the Court is unable to find based on this record, the Debtors’ history of unsuccessful sale efforts and this sale’s peculiar and questionable timing that Unixis has acted in good faith.
One struggles to understand the justification for authorization of payment for said work, as the commenter put it. At what point should a law firm tell a client not to go forward with work that will be costly and which is unlikely to achieve the desired goal?
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Authored by: jesse on Friday, October 16 2009 @ 11:01 AM EDT |
Thank you [ Reply to This | # ]
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Authored by: jesse on Friday, October 16 2009 @ 11:02 AM EDT |
Thank you [ Reply to This | # ]
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Authored by: jesse on Friday, October 16 2009 @ 11:03 AM EDT |
finally. [ Reply to This | # ]
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Authored by: IMANAL_TOO on Friday, October 16 2009 @ 11:07 AM EDT |
Why not put the lawyer's fees in bankruptcy cases on hold too? So, that they
cannot get paid until the case is "over"
Must be something someone has
suggested before.
(OT: BTW,
Linux users are growing according statistics from last year
)
--- ______
IMANAL
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Authored by: rsteinmetz70112 on Friday, October 16 2009 @ 11:32 AM EDT |
Is there a detailed accounting of what they already have paid themselves?
Perhaps that's the point, the Trustee wants everything to go through him, and
the court to be sure services were authorized.
Also if the retainer was pre-petition I don't think they have any right to
access it without explicit approval.
---
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
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Authored by: Anonymous on Friday, October 16 2009 @ 11:33 AM EDT |
In SCOG BK 890 the court
finds (emphasis added):
Here, the Debtors
offered no evidence
of the fairness of the price and, indeed, the price is highly suspect as
the
sale was clearly a rushed, last ditch effort to avoid the Conversion
Motions. There is no
evidence that the sale price is fair because it is just
enough for Debtors to dismiss their cases.
The terms are equally, if not more,
troublesome. Debtors are retaining the Mobility business
that is virtually
worthless, the letter of credit to pay a Novell judgment terminates on
December
31, 2009, with no guarantee that the Novell Litigation will be concluded.
Further,
the Court is unable to find based on this record, the Debtors’ history
of unsuccessful sale
efforts and this sale’s peculiar and questionable timing
that Unixis has acted in good faith.
It looks like BSP wants
to be paid for work in the June and July 2009 interim fee applications. It looks
like very much of this work was specific to that same sale agreement. I struggle
to understand the justification for authorization of payment for said work.
[ Reply to This | # ]
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Authored by: Anonymous on Friday, October 16 2009 @ 12:46 PM EDT |
If it's a mock trial where neither side in the "mock-up" have a stake in the
outcome, they have value. For example, doing mock trials as course practice in
Law 101.
However, when it's a mock trial put toghether by one side - as
in SCOG putting together a mock trial - how .... reasonable can it actually be?
In such a trial, would SCOG do their best to present the opposing sides
arguments?
For example, during this mock trial - assuming it occurred of
course - was the Jury presented with IBM's viewpoint that SCOG does not even own
the copyrights to the code they claim is infringed or was the Jury provided with
only evidence that SCOG did own the copyrights?
Did SCOG produce the full
text from the contracts? Or did they only produce those specific words - out of
context - that say what SCOG want them to say as they have done with their court
filings?
Additionally, how can they possible know what the opposing
arguments are going to be without discovery ending? For example, when SCOG
claimed to own control over JFS, did they realize at the time JFS was originally
written for OS2 then was ported from there to both AIX and Linux? How could
they present IBM's argument on that score if they didn't even know the
history?
In such a situation, the side putting together the mock trial
can easily structure things in a way they will always win. There's no value in
such an exercise except - perhaps - as press release value.
I guess in
such a situation, mock trials only start to have value after discovery is
closed. Possibly best to also wait for all PSJ's to be filed so one has a full
grasp of the opposing arguments as well as available evidence. I guess the PR
use of such a situation would have been drastically lessened.
Yea...
we performed a mock trial and lost, but we are confident we will still win in a
real court!
Perhaps that's why it's mentioned a lot of cases are
settled after discovery and before trial.
Of course, that's my humble,
non-lawyer, opinion on the strategy of a mock trial wherein the side putting
together the mock trial has a vested interest in the value of the outcome for
one particular side.
RAS[ Reply to This | # ]
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- Maybe in this situation... - Authored by: Anonymous on Friday, October 16 2009 @ 01:11 PM EDT
- Now that mock trial.... - Authored by: Anonymous on Friday, October 16 2009 @ 01:31 PM EDT
- Oops... - Authored by: Anonymous on Friday, October 16 2009 @ 02:53 PM EDT
- Particularly in this case - Authored by: Anonymous on Friday, October 16 2009 @ 02:00 PM EDT
- Personally, I don't put much stock in a mock trial in such a situation - Authored by: _Arthur on Friday, October 16 2009 @ 02:21 PM EDT
- Oops, wrong mock trial - Authored by: Anonymous on Friday, October 16 2009 @ 02:33 PM EDT
- Personally, I don't put much stock in a mock trial in such a situation - Authored by: Steve Martin on Friday, October 16 2009 @ 03:34 PM EDT
- If IBM did one I'd pay attention - Authored by: rsteinmetz70112 on Friday, October 16 2009 @ 05:41 PM EDT
- The keyword is "mock" - Authored by: Anonymous on Friday, October 16 2009 @ 10:34 PM EDT
- Maybe we should hold a mock funeral? - Authored by: Anonymous on Saturday, October 17 2009 @ 10:08 AM EDT
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Authored by: Anonymous on Friday, October 16 2009 @ 01:40 PM EDT |
Probably done at Siegfried & Jensen's own courtroom
Or maybe
conducted by Skyline High School's own debate team. [ Reply to This | # ]
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Authored by: Anonymous on Friday, October 16 2009 @ 02:23 PM EDT |
At least, not until the judge tells Berger Singerman that, no, they can't take
that money.
But the party is winding down. The bartender is clearly indicating that it's
last call.
MSS2[ Reply to This | # ]
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Authored by: Anonymous on Friday, October 16 2009 @ 02:43 PM EDT |
Maureen O'Gara uses the same "tremendous value" phrasing a one-time poster to a
Y message board used on 9/25/09.
The skich01 nym (created in 2004) can
trivially be shown to belong to the same Y log-in that a certain employee of
Ralph Yarro, Chris
Skillings used in April 2009 when writing in support of an anti-pron
initiative of Yarro's.
skich01
Re: Trustee to
Decide Whether to Pursue Litigation
20-Sep-09 09:25 pm
Actually the Trustee, a retired judge, after having reviewed the evidence
sees "tremendous value" in the litigation with IBM. The only reason the
litigation will not be pursued is if an IBM shill buys out the SCO shareholders
and shuts it all down in a "settlement" in everything but
name.
[ Reply to This | # ]
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Authored by: Anonymous on Friday, October 16 2009 @ 04:57 PM EDT |
The bankruptcy has a full "proof of claim" for R and D Strategic Solutions.
This company had contracted for a mock trial on August 23-24, 2007 and had
the event canceled at the last minute. The claim is for the initial fee
(12,046/two invoices), but the documentation shows the full budget for the never
conducted trial.
The proof of claim documents were tranfered to Argo Partners and
reside on the EPIQ docket as claim #73 . Log in/cookie setting to EPIQ may
be required for these links to work.
So the 2007 era mock trial never
occured.
Earlier news reporting in Spring 2004, also mentioned 'mock
trials'. There was some speculation that these might have been conducted
through "Carr & Farrell", but this is very poorly documented.
Maureen
and Darl may be referring to the rumoured 2004 trial, but the landscape has
changed in the time since that effort was attempted. [ Reply to This | # ]
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Authored by: Anonymous on Friday, October 16 2009 @ 05:28 PM EDT |
"I see Maureen O'Gara is reporting..."
... speaking of mockery![ Reply to This | # ]
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Authored by: DaveJakeman on Friday, October 16 2009 @ 05:28 PM EDT |
As we've seen, in a court of law anything can happen and most likely will. Not
only is the law squishy, but so is what happens during its application.
A mock trial is like playing both sides of a chess game. What makes chess a
game is that you don't know what your opponent is thinking. And likewise, you
can't do a realistic mock trial, because you are not your opponent.
And a trial is only one aspect of what decides the outcome of a case.
I can only see it has PR value, which -- surprise, surprise -- is what SCO is
using it for.[ Reply to This | # ]
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Authored by: sk43 on Friday, October 16 2009 @ 07:38 PM EDT |
<<Darl McBride is expecting to be fired shortly.>>
If you were appointed as a Chapter 11 Trustee, would you want the CEO who led
the company into its mess to still be around offering you unsolicited advice?
Fire him, and use the salary money to pay for an interim CEO. Isn't Bruce Cromer
available?[ Reply to This | # ]
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Authored by: Anonymous on Saturday, October 17 2009 @ 03:20 AM EDT |
At what point should a law firm tell a client not to go forward with work
that will be costly and which is unlikely to achieve the desired
goal?
Perhaps Berger Singerman did tell the client exactly
that. But the client makes the decision.
[ Reply to This | # ]
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Authored by: Ian Al on Saturday, October 17 2009 @ 05:05 AM EDT |
If I thought that MoG could remember past the last bottle
I
wonder if this, Dion Cornett
On SCOXE's Future, is the mock trial that MoG is recalling?
It was
actually Darl telling folks about it and it was an attempt to talk up the value
of the company just after they had been delisted.
I suspect it is now an
attempt to talk up the value of the litigation to support Darl's latest threats.
Even if it was more effective than last time, I can't see a seasoned ex-judge
losing any sleep over it.
--- Regards
Ian Al
Linux: Viri can't hear you in free space. [ Reply to This | # ]
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- Mock Trial in 2005. - Authored by: Anonymous on Saturday, October 17 2009 @ 12:04 PM EDT
- Problem - Authored by: Anonymous on Saturday, October 17 2009 @ 02:27 PM EDT
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Authored by: DannyB on Saturday, October 17 2009 @ 12:20 PM EDT |
As the fiasco appears to soon be over with, I wanted to take this opportunity to
say a big Thank You to PJ.
PJ, thank you for your amazing work, now in its seventh year. You have spent
more time, effort and frustration on this SCO nonsense than most of us will ever
know. The organization of documents and manpower has been an invaluable
resource, source of information, and sometimes even just amusement that many can
enjoy by just clicking a mouse button. You have suffered stalking and been the
subject of personal attacks that many of us probably only have a vague hint of.
Your award winning website deserves even more recognition than it has received.
I truly hope SCO no longer exists by Christmas 2009. (song: It's beginning to
look a lot like Chapter 7.)
Many people have already forgotten SCO and moved on. Thank you for your
perseverance.
I hope that the organization of people and resources, and the communities,
including Groklaw and others that have galvanized around the SCO litigation are
an ongoing force against existing, new and emerging threats to open source and
free software.
Again, thank you so much for your work.
---
The price of freedom is eternal litigation.[ Reply to This | # ]
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