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Chapter 11 Trustee Appointed For SCO
I Don't Believe in Imaginary Property writes "The judge overseeing the SCO Chapter 11 bankruptcy case has issued an order appointing a chapter 11 trustee to oversee SCO's operations. However, the judge's reasoning is far from clear. While the judge believes that SCO has 'abandoned rehabilitation' to bet its future on litigation, he doesn't think it appropriate to convert their case to Chapter 7 liquidation. So SCO's management hasn't been fired yet, but they're no longer fully in charge either. It's not clear why the bankruptcy judge opted for this solution, when even the US Trustee was pushing to fire SCO's management and convert the case to Chapter 7. In short, SCO is still only mostly dead, rather than all dead, and in desperate search of a miracle worker."
Please, whoever ends up acquiring SCO and their IP, set UnixWare and OpenServer free! Release the source code to both under a very liberal open source license. I hope Novell or whoever else has rights to the code could agree to that.
"Did you say to blathe? Well as everyone knows, to blathe means to bluff."
SCO bluffed, and got caught. Miracle Max only works for True Love, not To Blathe
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
...unless you're a lawyer. Look at the RIAA, SCO, et al. Their 'businesses' are all suffering while the lawyers laugh all the way to the bank.
It's a damn shame that the trial lawyer lobby is so strong.
3D Realms has announced post-reorganization merger plans with SCO Group. SCO shares were up $0.02/share for a gain of 10000% on the news that they would be suing themselves for non-performance.
However, the judge's reasoning is far from clear.
Maybe this is the judge's way of putting a watchdog on 'em to make sure they don't run out the door with or (further) destroy the value of some of the remaining assets before things get settled?
(Not only am I NAL but I'm especially NA bankruptcy L.)
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
There were stories that the CEO of Enron, Ken Lay called the Whitehouse after things collapsed. His call was not taken. Just a few years before he was Uncle Kenny at the BBQs in Crawford, TX. Probably be about the same here.
I'm not a lawyer and by no means an expert on bankruptcy but as I understand it bankruptcy judges are generally very hesitant about converting Chapter 11 to Chapter 7 bankruptcies unless pretty much everyone thinks they should. The general attitude of the American bankruptcy system is that companies should generally be given pretty close to every opportunity to get out to the wholes they've gotten into and that we shouldn't start filling the dirt in over them unless we've got really good reasons. Note also that this doesn't mean that SCO won't go through chapter 7. It just means it isn't going through chapter 7 right now. It could still convert later if things show no sign of improvement.
Looks like that might be it.
According to the Wikipedia article on chapter 11, chapter 11 lets the company run either under a court-appointed trustee or the "debtor in posession", i.e. the original management acting as a trustee and operating under the same rules, behind the shield of the bankruptcy process. And:
Looks like the judge is saying that, while it isn't clear yet whether SCO will be able to emerge from chapter 11 as a viable business or will have to be liquidated under chapter 7, the current management is either grossly mismanaging the company or at least making it appear that they aren't doing as well for the interests of the creditors and stockholders as a trustee would.
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
I think the first point about bankruptcy court is that the debtors are given time to reorganize and to become viable and the creditors are given an opportunity to get some of the money they are owed paid back.
The Judge is saying the guys who were running SCO were not taking bankruptcy seriously. The Judge called them out for bleeding cash, wasting time, requesting and missing multiple extensions on the deadline for them to produce a reorganizing plan, and coming up with the half-baked sales agreements all predicated on, after the particular assets are sold, creditors paid off, and attorneys funded, if, the big vaporous if, there's litigation proceeds, then SCO's owners and managers do very well. When he referenced "Waiting for Godot" and SCO's management "waiting for the dough" and betting the company on litigation, I think he chose the Chapter 11 Trustee plan so that when the appeals in Novell are decided (it is suggested that that will be by Aug. 31) someone with a clear eye can look at that decision and decide if there's truly money for the estate in pursuit of the litigation or whether it's time to turn out the lights. In the decision he repeats SCO's assertion that customers will miss them and I think he does that not as an endorsement of SCO's position but to signal that there is a profitable going concern in the server products and somebody will be glad to be in that business, i.e., there will be a serious buyer.
Between the lines, I think he does not like what SCO's management has done by following the litigation business model and I further think he sees that the only way for the smaller creditors to get their money back is to put less sue-happy people in charge. I'm sure the judge was not pleased with the way some bills got paid by subsidiaries and how Darl McBride paid for one suitor/rainmaker out of his own pocket. SCO was racing the clock and the clock ran out.
As a resident of Santa Cruz, I would expect any authentic "Santa Cruz Operation" to involve growing plants.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
The trustee has to investigate SCO's business. The trustee can decide that SCO's whole 'thing' is a fraud and has no chance of success. The trustee can settle all the cases out of court and on the terms that Novell and IBM dictate. That would put a quick end to the whole thing and Darl and company couldn't appeal the decision.
If SCO's assets were sold in chapter 7, there is a chance that the litigation would go on for years.
So, chapter 11 with a trustee might be better than chapter 7.
There were stories that the CEO of Enron, Ken Lay called the Whitehouse after things collapsed. His call was not taken.
"Your call has been forwarded to an automated voice messaging system. 'IS THIS THING ON? *tap, tap, tap* HEY THIS IS GEORGE LEAVE A MESSAGE!' is not available. At the tone please record your message. When you are finished recording you can hang up or press '1' for more options. To leave a callback number, press '5'."
I want peace on earth and goodwill toward man.
We are the United States Government! We don't do that sort of thing.
SCO petitioned at the last minute for an administrator, with less power than a real trustee, to handle only selected parts of a full Chapter 11 proceeding. That's what they liked best. From Groklaw, no one seems to know if such an arrangement was even a legal option.
A chapter 7 with appointed trustee is what they would like least. That presumes there's no chance of the company ever reorganizing, and the goal is instead to pay off as many of the creditors as possible.
The judge gave them something in the middle - a standard chapter 11 ,which means he is holding out the chance that some purchase offer might be legitimate and SCO just might rise again.
If I'm ever facing 20 years in maximum security, I plan to claim house arrest with an ankle bracelet is quite reasonable and customary for whatever I did, and see if the judge will split the difference and give me 5 in minimum security. Who knows, it could work.
Who is John Cabal?