SCO Proposes Sale of Assets To Continue Litigation

gzipped_tar sends in this excerpt from the Salt Lake Tribune: "The embattled SCO Group Inc. is proposing to auction off its core products and use proceeds to continue its controversial lawsuits over the alleged violations of its copyrights in Linux open-source software. The Lindon company has filed a new reorganization plan with the federal court in Delaware where it sought bankruptcy protection from creditors after an adverse ruling in the Linux litigation. If approved by a bankruptcy judge, the plan could mean SCO's server software and mobile products lines are owned by other parties while SCO itself remained largely to pursue the lawsuits under the leadership of CEO Darl McBride. 'One goal of this approach is to separate the legal defence of its intellectual property from its core product business,' McBride said in a letter to customers, partners and shareholders. Jeff Hunsaker, president and COO of The SCO Group, said the litigation had been distracting to the company's efforts to market its products. 'We believe there's value in these assets and in order for the business to move forward it's imperative we separate it from our legal claims and we allow our products business to move forward,' he said Friday."

Comments

Wow. Just wow.

[DurendalMac]

So Darl is going to basically sell off most of what the company has to continue a lawsuit he has no hope of winning? What the HELL is wrong with this guy? Worst. CEO. EVAR.

Re:Wow. Just wow.

[v1]

Am I the only one that is "reading between the lines" of Mr McBride as to saying that the viable business assets (IP/service) that SCO owns are "dragging down" the litigation efforts (distracting from them anyway, loss of focus) and that he wants to get rid of them, to strengthen the litigation business model?

How backwards is THAT?

"Just WOW" indeed... the ability of some people to surpass seemingly insurmountable levels of prior stupidity do continue to amaze me.

Re:Wow. Just wow.

[HiThere]

And even after all that, those they have injured will not have been made whole.

The law is unjustly lenient in cases like this precisely because it is being abused by lawyers, and most laws are written by lawyers. I don't know anyone else who could write them, but it creates an inherent bias in favor of those acts that lawyers perform and others don't. And in favor of those acts that people who hire lawyers perform and others don't.

I'm willing to consider arguments that this is not a fair summation of this aspect of the legal system, but I've never heard any that were convincing.

Re:Wow. Just wow.

[ultranova]

So Darl is going to basically sell off most of what the company has to continue a lawsuit he has no hope of winning? What the HELL is wrong with this guy? Worst. CEO. EVAR.

On the contrary, McBride managed to rise the stock price of his company with all of this nonsense. Of course the company was utterly destroyed as a result, but for a few moments any stockholder could get a fantastic return on investment (assuming he bought the stock on their pre-lawsuit low point). Since enchanting stockholder value for any price is the job of the CEO, that would make McBride a fantastic and extremely successful CEO.

I'm starting to think that high liquidity is actually undesirable for a stock market. In such a market, your best bet is to loot the company of anything valuable and sell the stock onward before the price crumbles. It encourages sacrificing long-term value for short-term profits, because, after all, you can take those short-term profits, run, and repeat the process with another company. There doesn't seem to be any built-in mechanism to discourage such psychopathic behaviour, or am I missing something ?

That depends upon his job.

[khasim]

If he finds a buyer (or buyers) for the products that pay enough for those products then SCO gets a lot of money. Some of which could be direct towards himself and the other execs as bonuses or whatever.

Now, if you question whether he can find a buyer willing to pay that much for a dying product, just remember that he has found investors and partners before who seemingly pay millions of dollars for nothing.

Right now, his job is to drag this case out.

Re:That depends upon his job.

[peragrin]

your forgetting the problem. The core products are what has been sued over. Darl can't sell them and continue the lawsuit as they wouldn't be the owners of the products anymore.

Not only is this proposal nearly two weeks late(it was due Dec. 31) This destroys the company and any potential assets creditors may have access to recoup their losses. Only a naive bankruptcy judge would allow the only asset a company has to be sold for literally nothing.

What's worse is that those products are only worth maybe 5 million at book value, and worth much less than a million in in their current neglected state. You can't pay lawyers making $500 an hour very long on that kind of money. especially how Boise seems to charge SCO for every staple used.

Correction and prediction

[OpenSourced]

Where is reads :

Jeff Hunsaker, president and COO of The SCO Group, said the litigation had been distracting to the company's efforts to market its products.

it should read :

Jeff Hunsaker, president and COO of The SCO Group, said the efforts to market its products had been distracting to the company's main litigation activity

There, that's it.

Now a prediction. I predict that they are going to find a very generous buyer, that will pay much, much more than the market value of the actives, allowing the new, rather hollowed-out SCO to keep on litigating for years. Call it a hunch.

if no sale, 10% cut in 280K salary

[RichMan]

Ah but if the sale fails to raise sufficient cash the company directors will take a 10% cut in their salaries.

Is $280k a year a good salary for a CEO of a company that is in bankruptcy and has so far burned through $0.25B of investor capital.

Oh and there are only 66 employees. I would bet your nearest grocery store is larger than that.

Beyond Horrible.

[misterjava66]

Imagine, a company selling off its primary assets to fund a shakedown lawsuit. If this is not proof that america is too litigious, what could be proof. This demonstrates just how sick this sue-for-profit legal system is. If sue-for-profit did not exist, SCO would be off trying make good products now and linux users would have never been intimidated. Sad sad day for our culture to see this continue yet again.

Re:Beyond Horrible.

[HiThere]

Unfortunately, this is not just one case. Though it is near the extreme end in senseless greed. And most similar cases aren't as well financed or pick such prominent targets.

This is but one of many similar cases. Most you never hear of. Then there's the SLAPP cases. A different category, but another category of cases that prove the same point.

Civil law is not about justice. I don't know if it ever was, but it clearly isn't now. It's not clear that criminal law is about justice either, but you can find more examples of cases where justice appears to have been done, or at least moderately approximated, in criminal law. You can also find many cases, however, where justice is clearly not the aim.

Lawyers are interested primarily in following official court procedures to achieve their chosen goals. Sometimes justice may result, but it's rarely the intent. This, unfortunately, applies to DAs as much as to other lawyers.

E.g., if justice were the intent, then plea bargaining would never be used. That is purely a coercive tactic to scare a possibly innocent person into asserting that they are guilty of a minor crime in order to escape having to prove that they aren't guilty of a major crime. It saves the DA a lot of work, but I can't think that it ever serves justice.

Giving up pretense

[sjames]

SO, SCO wishes to give up any pretense of doing anything productive at all now or ever again so they can divy up the only remaining value amongst the lawyers and executives and have nothing left to pay their creditors. It sounds like they've also given up all but the slimmest pretense of even attempting to provide ROI for their stockholders.

Re:McUnix

[j-pimp]

What if McDonald's buys SCO? McD's could hire a couple devs (since that is all SCO needs, apparently..) for maintenance and some support personnel, then service their own stores as well as other existing customers. Maybe they'd wind up saving, if not making, some money in a few years. Perhaps give Darl a store to manage...

SCO has several POS installations. The biggest complaint I heard from my coworkers that has sco experience when I was a unix admin was rebuilding the kernel. Apparently, you had to use some sort of linker to add drivers to the kernel. The second biggest was modern hardware support.

For B&W POS terminals these things are not concerns. If McDonalds bought all the source code outright, they could probably port everything to another unix in 6 months. A smarter move would be to work out some kind of deal where Sun ended up supporting the POS terminals, and McDonalds ended up getting a share of the profits from SCOs other POS customers. SCO has other POS customers, and McDonalds is not in the POS business. While they probably have some internal IT staff, they might not have any experience managing software developers.

It's the other way around:

[Hurricane78]

SCO is not selling its main core business and people. The main core and people (that's: SCO) are separating themselves from the sinking ship of McBride and his obsessive lawsuit disorder.

That's the problem with leaders with a strong reality: When they're wrong, it takes a looong time for people to realize this and move away. And it takes an even longer time, for them to realize it themselves. This is, because such a strong self-induced confidence has the risk of becoming delusional.
A delusion can only exist for that long, if the person has built a very rigid and interconnected system of values, where everything depends on everything else. So he can't pull that one thing, without destroying everything else in the process, causing his whole reality to break down. A state that equivalent to death for the human mind.
Even followers can suffer from this effect.

McBride now has a strong neurosis, forcing him to go 'till the very end... unless someone offers him a way out, that lets him keep his reality. Or to be more exact: His self-acceptance of being good and right in what he does and did. It's either that, or a deathlike experience.

If anyone who knows him personally reads this: Give him that way out. Offer him a way, that lets him go up in self-respect when follows it. And you will see this whole obsession, all the lawsuits, and his whole way of acting go away in a blink of an eye. He will suddenly be Ok with saying that all what he did was not the best thing to do. But he will have a reason that this is Ok for him anyway.

By any means: Do not put more pressure upon him. He will only fight harder. Remember: His other choice is death(like). So he will oppose you up to that level. Ok... except if you're really evil and actually want that to happen. ;) But then, how would you still be better than him??

Shouldn't there be a shareholder lawsuit?

[Greyfox]

Where is the shareholder lawsuit? Lots of people were buying right after they announced the lawsuit -- the share price hit more than $20 a share. Shouldn't there be a bunch of pissed off people with pitchforks and torches?

Re:Shouldn't there be a shareholder lawsuit?

[ucblockhead]

Honestly, having spent a lot on the SCO yahoo finance board (and having made a good bit of change shorting SCO stock) I can say that the willful ignorance on the part of a lot of SCO investors about the strength of the case was mind boggling. Most of those investors deserved the losses they suffered.

Re:McUnix

[rickb928]

Another possiblity is for McDonald's to buy SCO and then lhave the POS software ported to another platform. There are many, and Solaris might be the winner there.

Then SCO can truly die.

ps- This would be very difficult for the bankruptcy judge to turn down. Might be cheaper to McD's than licenses. Would still give ignat money to pursue his stupid suit.