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| Novell's Motion for Order Directing SCO to Remit Future SVRX Royalties - as text |
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Friday, October 05 2007 @ 09:00 AM EDT
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Here is Novell, Inc's Motion for Order Directing The Debtors to Remit Undisputed Future SVRX Royalties To Novell Upon Receipt [PDF], as text, one of the two motions Novell filed yesterday (see previous article for commentary). The text version of the Novell motion for a lifting of the automatic stay so it can go back to Utah and drag SCO across the finish line there will be posted next. Note that the hearing will be on November 6th. This is the one not to miss, I'd venture to guess, if you enjoy fireworks.
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UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In
re:
The SCO Group, Inc., et
al.,
Debtors.
Chapter 11
Case No. 07-11337 (KG)
(Jointly Administered)
Hearing Date: November 6, 2007 at 2:00 p.m. (ET)
Objection Deadline: October 23, 2007 at 4:00 p.m. (ET)
NOVELL, INC'S MOTION FOR ORDER DIRECTING
THE DEBTORS TO REMIT UNDISPUTED FUTURE SVRX ROYALTIES
TO NOVELL UPON RECEIPT
Novell, Inc. ("Novell") hereby moves pursuant to sections 541(d) and
105(a) of the
United States Bankruptcy Code, 11 U.S.C. §§ 101, et seq. (the
"Bankruptcy Code") for an order
directing the debtors to remit future software royalties to Novell when
received. By operation of
law and by agreement, these royalties are and will be Novell's property;
they are not property of
the estate. Without the benefit of the relief it seeks, which merely
gives effect to Novell's
express rights without intruding on the debtors' interests, Novell risks
loss of these funds in the
debtors' hands.
In support of this Motion, Novell relies on the Affidavit of Greg Jones
(the "Jones Aff."),
which is filed herewith, and states as follows:
PRELIMINARY STATEMENT
1.In 1995, Novell transferred certain UNIX software-related assets to
The Santa
Cruz Operation, Inc., predecessor in interest of The SCO Group, Inc.
("SCO"), via an Asset
Purchase Agreement (as amended, the "APA"). Novell, however, retained
all copyrights.
2. The transferred assets include SVRX software licenses (the "SVRX
Licenses"),
which generate an undisputed royalty stream for Novell. For these
licenses, SCO services the
underlying accounts as needed, collects the royalties when due and
remits 100% of them to
Novell quarterly. In return, SCO retains a 5% administration fee. Novell
retains the right under
the APA to unilaterally reclaim the preexisting SVRX Licenses and
collect 100% of the royalties
itself. Were Novell to exercise this right - which it may do at its
pleasure at any time under the
express terms of the APA - SCO would be deprived of its 5% fee.
3. SCO and Novell agreed on the royalty program in the APA, which
provides that
(among other things):
- SCO has only "legal title and not an equitable interest in such
royalties within the
meaning of Section 541(d) of the Bankruptcy Code." APA § 1.2(b).
- "All right, title and interest to the SVRx [sic] Royalties, less the
5% fee for
administering the collection thereof pursuant to Section 4.16 hereof'
are excluded
from the transfer. APA, Schedule 1. 1 (b)(VIII).
- "Within 45 days of the end of each fiscal quarter of [SCO], [SCO]
shall deliver to
[Novell] or [Novell's] assignee 100% of any SVRX Royalties collected in the
immediately preceding quarter." APA § 4.16(a).
- SCO is required "to [re]assign any rights to ... any SVRX License to
the extent so
directed in any manner or respect by" Novell. APA § 4.16(b).
4. SCO's next payment is due to Novell on November 14, 2007 for
collections made
between July 1, 2007 and September 30, 2007 (collectively with other
future remittances, the
"Undisputed Future SVRX Royalties").
2
5. Although under the APA SCO is required to pay Novell quarterly, this
Court
should order SCO to immediately remit the Undisputed Future SVRX
Royalties to Novell when
received. This relief is appropriate for two reasons. First, by
agreement and under section
541 (d) of the Bankruptcy Code, the Undisputed Future SVRX Royalties are
and will be Novell's
property when SCO collects them. They do not and will not belong to the
estate. In fact, a
constructive trust in the Undisputed SVRX Royalties for Novell's
exclusive benefit arises the
moment SCO receives them. Second, SCO's historical financial performance
suggests that SCO
may not have the funds to pay Novell at the end of each quarter. Thus,
absent SCO's immediate
remittance of the royalties to Novell, SCO may improperly use Novell's
property to fund SCO's
bankruptcy, making Novell a forced lender of new high-risk loans to the
estate. Indeed, this
would turn Novell's property into an involuntary gift to the estate and
its creditors. Nothing in
the APA or Bankruptcy Code sanctions SCO's use of Novell's property this
way. To the
contrary, the APA supplies Novell with a remedy expressly to avoid this
very problem.
6. If granted, this relief would not harm the estate. SCO would, for the
present,
continue to service the underlying accounts, earn its 5% fee, and
receive any other potential
benefit from the preexisting SVRX Licenses.
JURISDICTION
7. The Court has jurisdiction over this Motion pursuant to 28 U.S.C. §§
157 and
1334. Venue is proper in this District pursuant to 28 U.S.C. §§ 1408 and
1409. This matter is a
core proceeding within the meaning of 28 U.S.C. § 157(b)(2). The
statutory predicates for the
relief sought herein are sections 541(d) and 105(a) of the Bankruptcy Code.
3
GENERAL BANKRUPTCY CASE BACKGROUND
8. SCO and its affiliate, SCO Operations, Inc. (collectively with SCO, the
"Debtors"), filed voluntary petitions for relief under Chapter 11 of the
Bankruptcy Code on
September 14, 2007. On September 18, 2007, this Court entered an Order
directing joint
administration of the Debtors' estates.
FACTUAL BACKGROUND
9. SCO and Novell have been litigating their respective rights under the
APA before
the United States District Court for the District of Utah (the "District
Court") for almost four
years. Jones Aff., ¶8. A copy of the APA is attached to the Jones Aff.
as Exhibit "A."
10. On August 10, 2007, the District Court ruled on cross motions for
summary
judgment (the "District Court Rulings"). The District Court Rulings
determined that, under the
APA, SCO is required to collect Novell's SVRX Royalties for, and remit
them to, Novell on an
ongoing basis:
Under the APA, Novell and SCO agreed to an arrangement
whereby Novell would continue to receive one hundred percent of
the SVRX Royalties. [SCO] was to collect and pass through these
royalties to Novell, and Novell, in turn, would pay [SCO] an
administrative fee of five percent of the SVRX Royalties.
District Court Rulings, at 31 (citation omitted). See also District
Court Rulings, at 98 ("The
APA obligates SCO to give detailed monthly reports and to comply with
audits. APA §§ 1.2(b),
(f). To the extent that SCO has failed to comply with these requirements
with respect to the
2003 Sun and Microsoft Agreements, the court notes that it has a
continuing duty to fulfill its
contractual obligations. Novell also has continuing rights under the APA
to conduct audits as to
SVRX Royalties.") and 101 ("However, the court also notes that SCO has a
continuing
4
contractual obligation to comply with the accounting and reporting
requirements set forth in the
APA.").
11. For purposes of this Motion, there are two types of licenses that
generate or will
generate SVRX Royalties: first, the SVRX Licenses that originated before
the APA; and second,
licenses SCO entered into after the APA, including the so-called
"SCOsource" licenses and
buyout licenses with Sun Microsystems, Inc. and Microsoft Corp. in 2003
(collectively, the "Sun
and MS Licenses").
12. As to the Undisputed Future SVRX Royalties, SCO does not dispute that:
(a) Novell retained all equitable title specifically for purposes of
section 541(d) of the
Bankruptcy Code; and (b) SCO agreed to remit 100% of these royalties to
Novell, subject to
SCO's 5% administration fee. APA § 1.2(b); District Court Rulings, at 4,
31-32.
13. With regard to the remaining licenses, the District Court found that
SCO is liable
to Novell for SVRX Royalties because at least some portion of those
licenses used the SVRX
product. District Court Rulings, at 94, 98, 101. However, the District
Court was unable to
determine the dollar amount of these royalties in the context of summary
judgment because the
portion of SVRX product contained in each agreement remained a question
of fact. District
Court Rulings, at 98, 101. Accordingly, the amount of SVRX Royalties SCO
owes to Novell for
the Sun and MS Licenses and other SCOsource licenses is presently
disputed (the "Disputed
SVRX Royalties").
14. The District Court scheduled a trial for September 17, 2007 to
determine the
Disputed SVRX Royalties, among other things. Jones Aff., ¶15. However, on
the eve of that
trial and one full month after the District Court Rulings, SCO filed for
bankruptcy. As Novell is
concurrently filing a lift-stay motion to allow the District Court to
continue with that litigation in
5
order to address the apportionment issues (among other things), Novell
does not seek relief in
this Motion with respect to the Disputed SVRX Royalties. Accordingly,
only the Undisputed
Future SVRX Royalties are subject to the relief requested in this Motion.
15. From the third quarter 2006 through the second quarter 2007, SCO
remitted a
total of $696,413.67 in undisputed SVRX Royalties to Novell. Jones Aff.,
¶4. Novell estimates
that SCO will be required to remit between $500,000 and $800,000
annually in Undisputed
Future SVRX Royalties. Jones Aff., ¶5. The first Undisputed Future SVRX
Royalty is due on
November 14, 2007, which will include payments collected by SCO between
July 1, 2007 and
September 30, 2007. Jones Aff., ¶6.
RELIEF REQUESTED
16. Novell respectfully requests that this Court enter an Order
directing SCO to remit
the Undisputed Future SVRX Royalties to Novell immediately upon receipt.
ARGUMENT
A. Summary Of Argument
17. As Novell's collection agent, SCO owes Novell Undisputed Future SVRX
Royalties collected or to be collected going forward. The APA provides
that SCO is required to
make these remittances quarterly. However, using its general equitable
powers under
Bankruptcy Code section 105(a) this Court should order SCO to remit
these amounts to Novell
immediately upon receipt instead because: (a) the royalties are and will
be Novell's property
under section 541(d) of the Bankruptcy Code when collected, not estate
property, so upon
receipt, SCO will be required to hold them in trust for Novell's
exclusive benefit; (b) SCO's cash
may be depleted before the next or later Undisputed Future SVRX
Royalties come due under the
APA.
6
B. The Undisputed Future SVRX Royalties Are Not And Will Not Be Property
Of The
Estate When Received And SCO Is Required To Hold These Amounts In Trust For
Novell
18. The bankruptcy estate comprises "all legal or equitable interests of
the debtor in
property as of the commencement of the case."11 U.S.C. § 541(a)(1).
However, property in
which a debtor holds bare legal title but not an equitable interest is
not property of the estate.
11 U.S.C § 541(d); Kaiser Aluminum & Chemical Corp. v. Transcontinental
Ins. Co. (In re
Kaiser Aluminum Corp.), 2004 Bankr. LEXIS 33, at *9, Main Case No.
02-10429 (JKF), Adv.
Pro. No. 02-6531 (JKF) (Bankr. D. Del., January 16, 2004) (excluding
from property of estate
funds in which debtor held legal interest but no equitable interest, and
where agreement with
third party showed third party's superior interest in the funds); EBS
Pension LLC v. Edison Bros.
Stores (In re Edison Bros), 243 B.R. 231, 235 (Bankr. D. Del. 2000).
19. Here, as the District Court determined on summary judgment, the APA
establishes that SCO's interest in the Undisputed Future SVRX Royalties
is merely legal, not
equitable, specifically so that they would be excluded from SCO's
bankrupt estate in accordance
with section 541(d) of the Bankruptcy Code. The APA also specifies that
Novell retained all
equitable title. Thus, they are and will be Novell's property when
received by SCO, not property
of the estate.
20. Furthermore, the law requires SCO to hold the Undisputed Future SVRX
Royalties in trust for Novell. "The legislative history of section
541(d) makes clear that when a
debtor collects money on behalf of another, this money is held in
constructive trust for the
intended eventual recipient even absent any misconduct." EBS Pension LLC
v. Edison Bros.
Stores (In re Edison Bros.), 243 B.R. at 235. Thus, even if it wanted to
use the fiends for other
7
purposes, SCO is prohibited from doing so. Instead, it must hold them in
trust for Novell's
exclusive benefit.
C. The Debtors May Not Be Able To Pay The Undisputed Future SVRX
Royalties As
Agreed In The APA
21. SCO may not have the funds to pay Novell at the end of each quarter.
Historically, SCO's financial performance has been poor. Indeed, the
District Court Rulings
noted that "SCO has had financial problems, posting operational losses
for all years except
2003," the year SCO wrongfully retained the proceeds of the Sun and
Microsoft Agreements it
entered into that year. District Court Rulings, at 42 (citing exhibits
to Declaration of Michael
Jacobs). The Debtors' financial trouble will only be exacerbated by its
bankruptcy filing, a step
that typically compromises a debtor's relationships with customers,
account debtors and vendors.
Thus, it does not appear that the Debtors' financial position will
improve any time soon. Indeed,
they may run low on or even completely out of cash during the process of
trying to reorganize.
Thus, absent immediate remittance, SCO may use Novell's property to fund
SCO's bankruptcy
for its own benefit and that of its other creditors to Novell's prejudice.
22. Putting Novell's Undisputed Future SVRX Royalties at risk would, in
essence,
transform Novell into a forced lender of high risk loans to the estate
not through perpetuation of
an existing loan, but through the creation of a loan where there was
none before. This was not
something intended by the parties in the APA, which gave Novell the
right to reclaim the SVRX
licenses and the collection of their royalties in its sole discretion
precisely to enable it to protect
itself against SCO as a credit risk. Indeed, Novell could seek to
exercise its rights under APA
8
Section 4.16 forthwith, thereby denying SCO the ability even to earn its
5% administrative
collection fee. Nor is such a forced "loan" of another's property
authorized anywhere in the
Bankruptcy Code.
D. Section 105(a) Of The Bankruptcy Code Gives The Court The Authority
To Award
The Relief Requested Here
23. Under section 105(a) of the Bankruptcy Code, the Court has ample
authority to
order SCO to immediately remit the Undisputed Future SVRX Royalties to
Novell. Section
105 (a) gives the Court the power to "issue any order, process or
judgment that is necessary or
appropriate to carry out the provisions of title 11. 11 U.S.C. § 105(a).
It "is a powerful,
versatile tool ... that empowers bankruptcy courts and district courts
sitting in bankruptcy to
fashion orders in furtherance of Bankruptcy Code provisions." Joubert v.
ABN AMRO Mortgage
Group, Inc., 411 F.3d 452, 455 (3d Cir. 2005). Thus, bankruptcy courts'
equitable powers
enable them to "sift the circumstances ...to see that injustice or
unfairness is not done in the
administration of the estate." Pepper v. Litton, 308 U.S. 295, 307-08
((1939). See also, e.g.,
Sears Roebuck & Co. v. Spivey, 265 B.R. 357, 371 (E.D.N.Y. 2001)
(Section 105(a) "bestows on
bankruptcy courts a specific equitable power to act in accordance with
principles of justice and
fairness ...[and gives] [b]ankruptcy courts ...broad power latitude in
exercising this power")
(citation omitted).
24. Dobin v. Presidential Financial Corporation of Delaware Valley (In
re Cybridge
Corp.), 312 B.R. 262 (D.N.J. 2004), illustrates the creativity allowed
bankruptcy courts under
section 105(a) to serve principles of equity and fairness for nondebtors
such as Novell as much
as for debtors. In that case, the debtor filed a bankruptcy without
telling its secured factor it had
done so. The factor continued to collect and apply payments on the
factored receivables due to
the debtor from its customers and continued to make new advances to the
debtor, as well. The
9
debtor's trustee sued the factor to recover the receivables the factor
received and applied
postpetition as unauthorized transfers. The bankruptcy court ruled for
the trustee but it also
allowed the factor to, in essence, set off those unauthorized payments
against the further
advances it had made postpetition. Citing the general equitable powers
of section 105(a), the
district court affirmed this special relief for the factor, even though
it is not expressly provided
for in the Bankruptcy Code as a defense to the trustee's claim. In
affirming the bankruptcy
court, the district court wrote:
We further find that the Bankruptcy Court's exercise of its Section
105 (a) powers, rather than conflicting with the Code, actually
furthers its aims. "It is not the objective of the bankruptcy laws to
confer windfalls on debtors." In re Chicago, Milwaukee, St. Paul
UP. R.R. Co., 791 F.2d 524, 527 (7th Cir. 1987).
Dobin, 312 B.R. at 272-73.
25. Here, Novell simply is asking the Court to fashion relief consistent
with
protecting Novell's property rights that are specifically recognized
under section 541(d) so that
this bankruptcy does not jeopardize those rights and provide SCO with a
windfall.
26. The relief that Novell seeks here is far from extraordinary. Indeed,
Novell only
seeks the equivalent of a subset of what it could already accomplish at
its sole discretion under
APA Section 4.16 by having the SVRX Licenses reassigned to it. Moreover,
in asking for this
relief, it is willing (for the moment) to leave the job of royalty
collection in SCO's hands,
thereby allowing SCO to continue to earn its 5% commission on
collections, even though it also
could deprive SCO of that function and income by exercising its
reassignment rights under
Section 4.16.
10
27. All Novell is asking this Court to do under its equitable powers,
therefore, is to
provide Novell with fair and entirely reasonable protection of Novell's
property interests without
otherwise affecting SCO's interests.
CONCLUSION
28. The parties never intended that the SVRX Royalties be SCO's
property, either in
or out of bankruptcy; in fact, they expressly agreed to the contrary.
The Bankruptcy Code does
not change this relationship, nor does it permit SCO to hijack Novell's
funds. Moreover, in the
APA itself the parties gave Novell the absolute right to take steps to
protect its property by
demanding reassignment of the SVRX Licenses whenever it chose.
Accordingly, Novell submits
that the Court should order the relief requested in this Motion. What
Novell seeks here is, in
essence, an order implementing that bargain-for safeguard of its
Bankruptcy Code-protected
property rights.
WHEREFORE, Novell respectfully requests that the Court enter an order:
1. Directing SCO to remit the Undisputed Future SVRX Royalties to Novell
immediately upon receipt; and
2. Granting Novell such other and further relief as the Court deems just
and proper.
11
Dated: October 4, 2007
Wilmington, Delaware
YOUNG CONAWAY STARGATT & TAYLOR, LLP
/s/ Sean T. Greecher
James L. Patton (No. 2202)
Michael R. Nestor (No. 3526)
Sean T. Greecher (No. 4484)
[address, phone]
-- and --
MORRISON & FOERSTER LLP
Adam A. Lewis
[address, phone]
-- and --
MORRISON & FOERSTER LLP
Larren M. Nashelsky
James J. DeCristofaro
[address, phone]
Counsel for Novell, Inc.
1
The software industry refers to certain versions of UNIX as "SVRX,"
which stands for System V, Release
X. "X" is the generic placeholder for the release number: System V,
Release 1; System V, Release 2; and so on.
2 SCO collects other royalties that also belong to Novell, but these are
in dispute to some degree and
therefore not subject to this Motion. The undisputed and disputed
royalty streams shall be collectively referred to in
this Motion as the "SVRX Royalties."
3 SCO and some of its affiliated entities are required to remit SVRX
Royalties generated worldwide. The
only SVRX Royalties subject to this Motion are those remitted by SCO,
not by its affiliated entities.
4 SCO's very right even to enter into those licenses is itself one of
the issues remaining for trial.
5 Bankruptcy courts are especially sensitive about protecting a party's
interest in cash. See, e.g. O'Donnell v.
Royal Business Group, Inc. (In re Oxford Homes, Inc), 180 B.R. 1, 31-32
(Bankr. D. Me. 1995) (noting that
Bankruptcy Code "acknowledges that cash and cash equivalents are highly
susceptible to diversion and loss.")
Here, that concern is magnified because the cash involved unquestionably
is Novell's.
12
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| Authored by: feldegast on Friday, October 05 2007 @ 09:04 AM EDT |
So they can be fixed
---
IANAL
My posts are ©2004-2007 and released under the Creative Commons License
Attribution-Noncommercial 2.0
P.J. has permission for commercial use.[ Reply to This | # ]
|
- Corrections Here - Authored by: Anonymous on Friday, October 05 2007 @ 09:20 AM EDT
- Use the fiends.... - Authored by: Ashe on Friday, October 05 2007 @ 09:21 AM EDT
- LF/CR Between footnotes - Authored by: tyche on Friday, October 05 2007 @ 09:36 AM EDT
- Corrections Here: ' -> 1 - Authored by: Anonymous on Friday, October 05 2007 @ 10:46 AM EDT
- No closing quote after "All right, title and interest - Authored by: Anonymous on Friday, October 05 2007 @ 11:18 AM EDT
- Corrections Here - Authored by: Anonymous on Friday, October 05 2007 @ 02:43 PM EDT
- I was thrashed as a child - Authored by: Anonymous on Friday, October 05 2007 @ 03:31 PM EDT
- Corrections Here - Authored by: tsspdx on Friday, October 05 2007 @ 05:09 PM EDT
- Corrections Here - Authored by: Anonymous on Friday, October 05 2007 @ 11:07 PM EDT
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| Authored by: Erwan on Friday, October 05 2007 @ 09:06 AM EDT |
Don't forget the preview button...
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Erwan[ Reply to This | # ]
|
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| Authored by: Erwan on Friday, October 05 2007 @ 09:11 AM EDT |
As usual
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Erwan[ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 05 2007 @ 09:21 AM EDT |
I thought the attachments were interesting. Have we seen the full APA with all
the attachments before? I note that there is a list of copyrights, with
registration numbers, that transferred. Unfortunately for SCO, none of them
said source code.
I did not see the APA amendments. Was this an oversight by Novell?[ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 05 2007 @ 10:59 AM EDT |
"... including the so-called "SCOsource" licenses and buyout licenses with Sun
Microsystems, Inc. and Microsoft Corp. in 2003 (collectively, the "Sun and MS
Licenses")"
I wonder what is meant by a "buyout license"?[ Reply to This | # ]
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- Buyout Licenses? - Authored by: Anonymous on Friday, October 05 2007 @ 11:17 AM EDT
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| Authored by: txwikinger on Friday, October 05 2007 @ 11:38 AM EDT |
Are there any developments expected today? When is the
deadline for SCO to respond to Novell's motions?[ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 05 2007 @ 11:56 AM EDT |
Novell relies upon Judge Kimball's ruling on cross-motions
for summary judgment which have not been reduced to a final judgment. These
rulings are subject to modification at any time prior to a final judgment on the
merits in the Utah District Court.
The rulings are not res judicata in the Delaware Bankruptcy Court. I strongly
suspect SCO will point to this fact in a reply to Novell's motion. SCO's motive
for filing in the Delaware jurisdiction instead of Utah was to force Judge
Kimball's rulings to be reduced to a final order which may then be appealed in
the Tenth Circuit. Novell probably should have moved for a change of venue back
to the Utah district on the ground of judicial economy. [ Reply to This | # ]
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| Authored by: Wardo on Friday, October 05 2007 @ 12:09 PM EDT |
PJ, you report that the hearing on these matters will be November 6th, but I
don't recall that being on the agenda.
The only agenda I recall seeing was for the hearing scheduled (now canceled) for
Today, 5 October 2007. I'm guessing that the "Omnibus Hearings" cover
all these sorts of motions?
Is it possible that the BK Judge will rule before the November 5 hearing,
assuming that SCOx files a reply before the deadline? Also, how long do we have
to wait before SCOx replies to Novell's motion? I didn't see any deadlines for
motions/replies for the omnibus hearings in [55] or [57].
Any bets on overlength requests/filings or de-novo review requests?
Wardo
PS: The timeline page is missing the 18 October 2007 hearing [64] in the
Hearings section. Unless I missed it being canceled or postponed.
---
caveat lector...
Wardo = new user(lawyer = FALSE,badTypist = TRUE,badSpeller = TRUE);[ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 05 2007 @ 12:28 PM EDT |
...the stay should be lifted
...the stay should be lifted
...the stay should be lifted.
Reminds me of Cato's refrain!
[ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 05 2007 @ 12:56 PM EDT |
IANAL and IANAA (I am not an accuantant) but it seemed to
me from the numbers SCO filed with the BK court that they
had still more available cash than total debt, because
they did not include anything for the MS+Sun debts to
Novell. Now, it is clear that if they let Kimball rule on
that issue they would most certainly be deep in the red,
hence they preemptively filed for chapter 11. But that's
exactly the problem I see with my mathematician logic:
1. If they do not admit owing $millions to Novell for the
MS+Sun licenses, then they are not bankrupt, why are they
wasting the Delaware court's time ?
2. If they do admit, then they have to indicate the amount
and put Novell on top of the creditor list, but they can't
state the amount without Kimball's ruling.
I know such contradictions never bothered SCO, they keep
claiming opposite things in various courts all the time.
But I am surprised that Novell did not raise this logical
fallacy in their motion. They only state that SCO filed
the BK in "bad faith" - whatever that means legally. But I
think it is more than that, they are technically NOT in BK
until Kimball rules.
Am I completely off base here, or others also see a logic
problem ?
Zs.Zs.
[ Reply to This | # ]
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| Authored by: darlmclied on Friday, October 05 2007 @ 02:46 PM EDT |
| Note that the hearing will be on November 6th. This is the one not to miss,
I'd venture to guess, if you enjoy fireworks.
With November 5th
bonfire night in the UK and traditionally a night for fireworks, it sounds like
the firework parties will run into the next day.
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| Authored by: Anonymous on Friday, October 05 2007 @ 03:58 PM EDT |
Judge Gross will deny motion for Sco to pay Novell immediately on receipt of
undisputed license revenue. He will grant the lift stay motion.
My reason (not remotely based on legal knowledge) is that Gross seems very
practically oriented, from what he has said so far. For the funding motion, I
expect he'll conclude that there is no actual problem to fix - no one has made
the case that moneys aren't being paid - so no need for judicial action.
As for the lift stay, the issues must be resolved, and an already prepped 5 day
trial is enormously more efficient than any other approach. [ Reply to This | # ]
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| Authored by: thorpie on Friday, October 05 2007 @ 04:29 PM EDT |
If Novell wins this motion will the collected monies still show in SCO's
accounts? What would this do to SCO's accounts?
I mean if the monies go
directly to a trust does it means that they no longer show as cashflows in SCO's
books. An $800,000 reduction in SCO's cashflow will leave them with
effectively $0 cashflow. A company with $0 cashflow really does not need
any accounting or other staff. An $800,000 reduction in their cashflow will
make it easier to for the court to decide that SCO paying a CFO $200,000 is
not justifable
---
The memories of a man in his old age are the deeds
of a man in his prime - Floyd, Pink [ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 05 2007 @ 07:05 PM EDT |
Is there any realistic prospect of anyone going to SCO for a licence until the
Novell suit is over?[ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 05 2007 @ 07:23 PM EDT |
How soon does SCO have to provide a reorganization plan? Who decides if the
plan is valid or likely to succeed? [ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 05 2007 @ 07:34 PM EDT |
| From: http://vls.law.vill.edu/locator/3d/Dec1999/995319.txt
Four factors
guide our adoption of a good faith standard
--the permissive language of S
1112(b), viewed in light of its
legislative history; the decisions of our sister
courts of
appeals; the equitable nature of bankruptcy; and the
purposes
underpinning Chapter 11.
We begin with 11 U.S.C. S 1112(b), which allows
the
court to dismiss or convert a Chapter 11 petition for cause
including--
(1) continuing loss to or diminution of the estate
and absence of a reasonable likelihood of
rehabilitation;
(2) inability to effectuate a plan;
(3) unreasonable
delay by the debtor that is
prejudicial to the creditors;
(4)
failure to propose a plan [of reorganization]
within any time fixed by
the court;
(5) denial of confirmation of every proposed plan
and denial of a request made for additional time for
filing another plan
or a modification of a plan;
(6) revocation of an order of
confirmation under
section 1144 of this title, and denial of
confirmation
of another plan or a modified plan under section
1129
of this title;
(7) inability to effectuate substantial
consummation of a confirmed plan;
(8) material default by the debtor
with respect to a
confirmed plan;
(9) termination of a plan
by reason of the
occurrence of a condition specified in the plan; or
(10) nonpayment of any fees or charges require d
under chapter 123
of title 28. [ Reply to This | # ]
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