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SCO Preps Appeals Against Novell and IBM

Posted by samzenpus on from the harder-to-kill-that-the-tarrasque dept.

An anonymous reader writes "It looks like SCO will be emerging from the almost dead soon, with new owners and $100 million on board. SNCP is adjusting the business strategy, according to this report on TG Daily, SCO is saying goodbye to CEO Darl McBride and is also preparing to appeal the summary judgments in the cases against Novell and IBM. If you have thought the chapter was closed, think again. Those $100 million can go a long way (even if SCO has to pay 17% interest on it)."

8 of 163 comments (clear)

  1. Now that's a deal. by Black+Parrot · · Score: 4, Insightful

    Use your bail-out money to dig the hole deeper.

    --
    Sheesh, evil *and* a jerk. -- Jade
    1. Re:Now that's a deal. by Daengbo · · Score: 5, Insightful
      Exactly. How much longer can this go on?
      We've determined that:
      1. They never ponied up the code that supposedly infringed, strongly suggesting that it doesn't exist.
      2. They didn't even have the right to the copyrights of the Unix code they claimed Linux infringed upon.
      3. They (probably fraudulently) collected license money for "protection" against the non-existent claims in #1 on the inelligible code in #2.
      4. They did it all while making themselves rich and the stockholders poor through pump-and-dump.
      Shouldn't people like this be in jail?
      --
      Put identity in the browser.
    2. Re:Now that's a deal. by Anonymous Coward · · Score: 5, Insightful

      Not exactly. Anyone who wins a judgment vs. SCO will become an unsecured creditor. They don't "own" SCO if they win. The court can award money damages, it can't force SCO stockholders to sign over their shares or force SCO to print new ones. Besides, Novell is unlikely to accept SCO shares as payment (given the lack of underlying value).

      I think the goal here is to get SNCP onboard as a creditor ahead of any judgements against SCO. That way, they can continue to run up the expenses and drag out the court actions. When the day of reckoning is finally here, SNCP will be a huge creditor. They will take quite a loss, even after chewing up what remains of SCO. I suspect SNCP will get reimbursed via the PIPE fairy or whoever was underwriting the deal with Baystar.

      As a private company, SCO will be exempt from all kinds of shareholder disclosures, SEC regulations, etc. Very useful in pursuit of this strategy.

      There is one factor that the SCO folks may not have considered: Their strategy sets a scary precedent. If it works, we might see the "scorched earth" defense become commonplace. We might even see individuals doing the same type of thing when faced with a liability suit. This would make a mockery of the judicial system. SCO has to lose, and lose big. Their financial co-conspirators need to be exposed and clobbered. Unless they get a royal smackdown from the court, this behavior will be validated and probably repeated by others in the future.

  2. poetic justice by peektwice · · Score: 5, Insightful

    In a way, it's kind of poetic that these trolls are going to get raped by a loan shark (SNCP) at 17% interest. 95 million times 17% times 5 years is 80.75 million dollars, not compounded. That's an ass raping if I ever heard of it. Plus, they're going to have to pay 37 million to Novell, if they lose their appeal. It feels like something much deeper and more sinister is going on here, and it stinks. I just can't put my finger on it yet.

    --
    Other than this text, there is no discernible information contained in this sig.
  3. The Wizard of Oz by killmenow · · Score: 5, Insightful

    Who keeps giving/lending these clowns money?

    Pay no attention to the largest proprietary software company in the world behind the curtain.

  4. SCO doesn't have anything yet by HangingChad · · Score: 5, Insightful

    They don't have squat until the BK court approves it. Even then they only get 5 million and 95 million in flash cash. If the trustee tells them to put the money in escrow against potential judgments from IBM and Novell, that will flush this deal. This is all show but I haven't figured out who the audience is supposed to be. The BK court isn't going to be impressed.

    I'm not sure what they're going to appeal. SCO dug themselves a really deep hole, an appeal is a long shot.

    No one with a brain would loan SCO a nickel. It would take a cash cow like Microsoft to convince anyone to get in bed with SCO. Maybe that answers who the audience is supposed to be. Like there are serious players who think SCO's IP claims have merit. Ooooo, scary. If that's the case this is to business strategy what the Zune is to Apple.

    --
    That's our life, the big wheel of shit. - The Fat Man, Blue Tango Salvage
  5. I can live with that by Weaselmancer · · Score: 5, Insightful

    Using this 21% loan to file appeals is a lot like using your credit card to buy lottery tickets.

    They're that desperate, and I can live with that.

    --
    Weaselmancer
    rediculous.
  6. Except For One Thing by maz2331 · · Score: 4, Insightful

    The court ruled that SCO *converted* money that was actually Novell's in the licensing racket, so SCO never had actual ownership of that cash. That is way different from normal debt, and can't be discharged under bankruptcy. The only reason this liability isn't "on the books" yet is that the original court hasn't figured out how much it is, but it's safe to assume that it will be "a lot".

    As a bonus, the court that will be deciding how much it is will be the same one that SCO told no trust fund was required because bankruptcy wasn't imminent just a few weeks before they filed for bankruptcy. They are almost certainly well and truly fucked here, and "spin" isn't going to change that. Their whole strategy seems to be to provoke the judge to anger so they have an issue for appeal, but Kimball is a pretty cool customer who will make sure that his ruling is air-tight.

    The Utah court's summary judgment held that SCO does *not* own the copyrights to the code they are licensing. SCO built their entire case around a theory of "but... we paid a lot of money for this business, and of course it transferred the copyrights to us! Never mind what the actual contracts said." Too bad for them that the court rejected that argument totally.

    And, this article presumes that the BK court will approve the deal, and do so over the objections of the major creditors. The judge may well not approve the deal as written, as there is no real guarantee of the additional $95M being actually available, and further since the $95M is a line of credit at a 17% interest rate it could magically evaporate at any time.

    The deal really doesn't provide any security for the creditors at all, nor does it put the post-bankruptcy SCO in a financial position where it is unlikely to be back in bankruptcy in the near future. Indeed, it puts the company squarely in debt for even more than it faces to begin with due to the interest. The creditors names change, but the debt remains and really grows exponentially.

    The only way I can see the court approving this is if the entire $100M were a straight-up equity purchase which was a cash infusion sufficient to pay off and retire all the debt. Just moving the chairs around on the deck isn't going to pass muster here.

    As for the appelate courts, SCO's behavior prior to summary judgement will be a huge factor. They dragged the case out, refused to comply with discovery orders, and changed their arguments constantly.