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US Trustee Objects to SCO's Proposed Asset Sale and more
Wednesday, November 14 2007 @ 12:27 AM EST

The US Trustee has filed two objections, one to the asset sale, the terms of which it calls unreasonable, and one to the use of the temp agency to hire a CFO. I am feeling like the unraveling has begun. There are more filings, but nothing like this! So without delay, here these two are:

Enjoy! I'll post the rest as soon as I can.

And here's everything:

196 - Filed & Entered: 11/07/2007
Affidavit/Declaration of Service
Docket Text: Affidavit/Declaration of Service (and Service List) Regarding [Signed] Order Approving the Employment of Mesirow Financial Consulting, LLC as Financial Advisors to the Debtors (related document(s)[190] ) Filed by The SCO Group, Inc.. (O'Neill, James)

197 - Filed & Entered: 11/07/2007
Affidavit/Declaration of Service
Docket Text: Affidavit/Declaration of Service (and Service List) Regarding [Signed] Order Authorizing Retention of Professionals Utilized in the Ordinary Course of Business Pursuant to Sections 327 and 328 of the Bankruptcy Code (related document(s)[192] ) Filed by The SCO Group, Inc.. (O'Neill, James)

198 - Filed & Entered: 11/08/2007
Order on Motion to Appear pro hac vice
Docket Text: Order Granting Motion for Admission pro hac vice of Scott H. McNutt, Esquire. (Related Doc # [195]) Order Signed on 11/7/2007. (LCN, )

199 - Filed & Entered: 11/09/2007
Certification of Counsel
Docket Text: Certification of Counsel Regarding Order Granting Debtor The SCO Group Inc.'s Motion to Enforce the Automatic Stay (related document(s)[69] ) Filed by The SCO Group, Inc.. (Attachments: # (1) Exhibit A) (O'Neill, James)

200 - Filed & Entered: 11/09/2007
Certification of Counsel
Docket Text: Certification of Counsel Regarding Order Denying Novell, Inc.'s Motion for Order Directing the Debtors to Remit Undisputed Future SVRX Royalties to Novell Upon Receipt (related document(s)[90] ) Filed by The SCO Group, Inc.. (Attachments: # (1) Exhibit A) (O'Neill, James)

201 - Filed & Entered: 11/13/2007
Objection
Docket Text: Objection to Debtors' Motion for Approval of Employment of CFO Solutions to Furnish Chief Financial Officer to the Debtors (related document(s)[139] ) Filed by United States Trustee (Attachments: # (1) Exhibit A -- Crisis management protocol# (2) Certificate of Service) (McMahon Jr., Joseph)

202 - Filed & Entered: 11/13/2007
Objection
Docket Text: Objection to Emergency Motion of the Debtors for An Order (A) Approving Asset Purchase Agreement, (B) Establishing Sale and Bidding Procedures, and (C) Approving the Form and Manner of Notice of Sale (related document(s)[149] ) Filed by United States Trustee (Attachments: # (1) Certificate of Service) (McMahon Jr., Joseph)

Here are the two objections as text:

***********************************

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re

THE SCO GROUP, INC., et al.,

Debtors.
Chapter 11

Case Number 07-11337 (KG)
(Jointly Administered)

OBJECTION OF THE UNITED STATES TRUSTEE TO THE EMERGENCY MOTION
OF THE DEBTORS FOR AN ORDER (A) APPROVING ASSET PURCHASE
AGREEMENT, (B) ESTABLISHING SALE AND BIDDING PROCEDURES, AND (C)
APPROVING THE FORM AND MANNER OF NOTICE OF SALE
(DOCKET ENTRY # 149)

In support of her objection to the emergency motion of the Debtors for an order (a) approving the asset purchase agreement, (b) establishing sale and bidding procedures, and (c) approving the form and manner of notice of the sale (the "Motion"), Kelly Beaudin Stapleton, United States Trustee for Region 3 ("U.S. Trustee"), by and through her counsel, avers:

INTRODUCTION

1. Under (i) (an) applicable order(s) of the United States District Court for the District of Delaware issued pursuant to 28 U.S.C. § 157(a) and (ii) 28 U.S.C. § 157(b)(2)(A), this Court has jurisdiction to hear and determine the Motion.

2. Under 28 U.S.C. § 586, the U.S. Trustee has an overarching responsibility to enforce the laws as written by Congress and interpreted by the courts. See United States Trustee v. Columbia Gas Sys., Inc. (In re Columbia Gas Sys., Inc.), 33 F.3d 294, 295-96 (3d Cir. 1994) (noting that U.S. Trustee has "public interest standing" under 11 U.S.C. § 307 which goes beyond mere pecuniary interest); Morgenstern v. Revco D.S., Inc. (In re Revco D.S., Inc.), 898 F.2d 498, 500 (6th

1

Cir. 1990) (describing the U.S. Trustee as a "watchdog").

3. Under 11 U.S.C. § 307, the U.S. Trustee has standing to be heard on the Motion and the issues raised in this objection.

GROUNDS/BASES FOR RELIEF

4. The U.S. Trustee objects to the Motion on the grounds identified below.

No Discussion of Marketing Process to Date

5. In the Motion, the Debtors do not provide any details regarding their efforts to market their assets for sale prior to executing the Term Sheet with Proposed Purchaser. While such details are relevant to determining whether the Debtors conducted the sale process in good faith (an issue that will be addressed at a later hearing in the event bidding procedures are approved), they are also relevant to evaluating whether this Court should endorse the Debtors' suggested timetable for the auction and sale. The Debtors should make a record regarding their pre-Term Sheet marketing efforts which justifies the relief they are seeking from this Court.

Consumer Privacy Under 11 U.S.C. § 363(b)(1)

6. The Motion does not provide sufficient information for the U.S. Trustee to determine whether a consumer privacy ombudsman needs to be appointed to protect personally identifiable information about individuals. 11 U.S.C. § 363(b)(1) provides:

(b)(1) The trustee, after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate, except that if the debtor in connection with offering a product or a service discloses to an individual a policy prohibiting the transfer of personally identifiable information about individuals to persons that are not affiliated with the debtor and if such policy is in effect on the date of the commencement of the case, then the trustee may not sell

2

or lease personally identifiable information1 to any person unless —

(A) such sale or lease is consistent with such policy; or

(B) after appointment of a consumer privacy ombudsman in accordance with section 332, and after notice and a hearing, the court approves such sale or such lease —

(i) giving due consideration to the facts, circumstances, and conditions of such sale or such lease; and

(ii) finding that no showing was made that such sale or such lease would violate applicable nonbankruptcy law.

7. Under the Term Sheet appended to the Motion, the assets proposed to be transferred include "all (i) customer and client lists, vendor lists, catalogues, data relating to vendors, promotion lists and marketing data and other compilations of names and requirements, (ii) telephone numbers, internet addresses and web sites, and (iii) other material information related to Seller's business." The U.S. Trustee intends to determine whether the Debtors provide a privacy policy to consumers in connection with their business and, if so, whether the policy prohibits the transfer of personally identifiable information to third parties. The U.S. Trustee will report to the Court on this issue at

3

the hearing on the Motion and the related matter of whether a consumer privacy ombudsman should be appointed.

Break-Up Fee and Expense Reimbursement Provisions

8. Through the Motion, the Debtors are seeking approval of certain bid protections. In paragraphs 11 and 12 of the Motion, the Debtors state:

The APA and Term Sheet provide that the Seller will reimburse up to $50,000 of Proposed Purchaser's fees and expenses (including, without limitation, legal costs and fees) incurred or to be incurred in connection with the consummation of the transaction (the "Guaranteed Expense Reimbursement"). Further, if Purchaser is designated as "stalking horse" under the Bid Procedures Order, but either: (a) Proposed Purchaser is not the successful bidder or (b) any of the Transferred Assets are transferred by Seller to any party other than Proposed Purchaser (whether pursuant to the Auction or otherwise), then Proposed Purchaser shall receive from Seller: (i) a cash breakup fee in the amount of $780,000 (the "Breakup Fee"), and ([ii]) reimbursement of all expenses incurred by Purchaser, in an amount up to $300,000 (the "Alternative Transaction Expense Reimbursement"), in both cases payable upon the earlier of consummation of a subsequent transaction to a party other than Proposed Purchaser or the entry of a final, non-appealable order confirming a Chapter 1 plan (an "Alternative Transaction"). In addition, without duplication, if the APA is terminated other than as a result of a material breach by Purchaser or the failure to be satisfied of a condition precedent to closing that is not caused by the material breach of Seller, and Seller is not obligated to pay the Breakup Fee, then Seller will nevertheless be obligated to pay the Alternative Transaction Expense Reimbursement to Purchaser up to a maximum of $300,000. The Breakup Fee, Guaranteed Expense Reimbursement and Alternative Transaction Expense Reimbursement shall be treated as superpriority administrative expenses under 11 U.S.C. §§ 503 and 507(a) and paid in cash immediately when due or through the closing of an Alternative Transaction or when otherwise due and payable under the APA. (Footnotes omitted).

9. Initially, in the absence of an executed asset purchase agreement, this Court should not approve the requested bid protections, as an uncommitted bid does not deserve such protections.

4

10. Under the controlling decision by the United States Court of Appeals for the Third Circuit in Calpine Corp. v. O'Brien Environmental Energy, Inc. (In re O'Brien Environmental Energy, Inc.), 181 F.3d 527 (3d Cir. 1999), there are several problems with the Debtors' request to have bid protections approved:

(a.) First, the gross amount of the protections, taken together, are disproportionate to the present value of the bargain. The cash portion of the proposed transaction — $10 million — is the only "sure" part of the proposal; the rest of the consideration to be paid by Proposed Purchaser comes in the form of: (i) a $10 million financing commitment that, if tapped, will be a liability of the Debtors' estates, (ii) an obligation to share the "upside" of the Linux litigation in an amount up to $10 million (via a 20% interest in the proceeds realized from such litigation), and (iii) up to $6 million in the form of a revenue sharing agreement related to the Hipcheck product line and Me Inc. Mobile which is tied to "non-guaranteed" sales targets. Per the Debtors' public filings, the success of the Linux litigation hinges upon the Debtors' ability to establish ownership of certain intellectual property rights, the same rights which the United States District Court for the District of Utah recently found were owned by Novell. Further, it is unclear whether Hipcheck and Me Inc. Mobile products are market-ready. Thus, the bid protections may actually exceed 10% of the present value of the consideration proposed to be paid under the transaction and, at a minimum, the protections significantly exceed the standard range of 2-3% which this Court has used as a benchmark to determine the appropriate amount of such protections.

(b.) Second, the payment "triggers" are unreasonable in three respects. First, Proposed Purchaser should not be receiving a guaranteed expense reimbursement; all fees should be tied to consummation of an alternative transaction. Second, the definition of an "alternative transaction"

5

should be restricted in two ways: (i) to the extent that the bid protections would be tied to the confirmation process, they should be tied to the effective date of a chapter 11 plan — not the confirmation of a plan; and (ii) there should be a time frame running from the bid deadline (i.e., three months) which limits the Debtors' obligation to pay the bid protections — for example, if the cases convert to cases under chapter 7 and a trustee sells the assets at a liquidation price six months from now, the Debtors' estates will not have received a benefit from the Proposed Purchaser's "floor" bid in connection with such a sale. Third, to the extent that this Court approves reimbursement of Proposed Purchaser's expenses, payment thereof should be subject to the U.S. Trustee's review of documentation supporting the request.

(c.) Third, there is no legal basis for granting the proposed bid protections superpriority administrative expense status. 11 U.S.C. §§ 364(c) and 507(b) are the only sections of the Code which authorize superpriority claim status, and those sections address (i) the obtaining or incurring of debt in the event that the debtor-in-possession/trustee is unable to obtain unsecured credit and (ii) adequate protection of a secured claim which later proves to be inadequate. See 11 U.S.C. §§ 364(c), 507(b). Clearly, 11 U.S.C. §§ 364(c) and 507(b) do not apply to the bid protections which the Debtors propose to pay. Absent authority supporting the argument that this Court has the authority to elevate bid protections to superpriority administrative expense status, this Court should reject the Debtors' proposal.

11. The Debtors' request for "approval" of the asset purchase agreement is inappropriate. First, approval of the asset purchase agreement is a sale hearing issue. In the event that bid protections are approved, the appropriate sections of the asset purchase agreement may be referenced as "approved" in the bid procedures order.

6

12. In the event that this Court approves bid procedures, the procedures should expressly provide for the U.S. Trustee's rights to (i) inspect bids submitted in connection with the sale process and (ii) attend any auction held pursuant to the procedures.

13. The U.S. Trustee reserves the rights to be heard on and/or to object to any matters relating to the proposed sale, said matters being expressly reserved for a subsequent sale hearing.

CONCLUSION

WHEREFORE the UST requests that this Court issue an order denying the Motion or granting other relief consistent with this objection.

Respectfully submitted,
KELLY BEAUDIN STAPLETON
UNITED STATES TRUSTEE

BY: /s/ Joseph J. McMahon, Jr.
Joseph J. McMahon, Jr., Esquire (# 4819)
Trial Attorney
United States Department of Justice
Office of the United States Trustee
[address]
[phone]
[fax]

Date: November 13, 2007

7

1 "Personally identifiable information" is defined in 11 U.S.C. § 101(41A) as meaning
(A) if provided by an individual to the debtor in connection with obtaining a product or a service from the debtor primarily for personal, family, or household purposes —

(i) the first name (or initial) and last name of such individual, whether given at birth or time of adoption, or resulting from a lawful change of name;

(ii) the geographical address of a physical place of residence of such individual;

(iii) an electronic address (including an e-mail address) of such individual;

(iv) a telephone number dedicated to contacting such individual at such physical place of residence;

(v) a social security account number issued to such individual; or

(vi) the account number of a credit card issued to such individual; or

(B) if identified in connection with 1 or more of the items of information specified in subparagraph (A) --

(i) a birth date, the number of a certificate of birth or adoption, or a place of birth; or

(ii) any other information concerning an identified individual that, if disclosed, will result in contacting or identifying such individual physically or electronically.

************************************

UNITED STATES BANKRUPTCY
COURT FOR THE DISTRICT OF DELAWARE

In re Chapter 11
THE SCO GROUP, INC., et al.,
Debtors. Case Number 07-11337 (KG)
(Jointly Administered)

OBJECTION OF THE UNITED STATES TRUSTEE TO THE DEBTORS' MOTION
FOR APPROVAL OF EMPLOYMENT OF CFO SOLUTIONS TO FURNISH CHIEF
FINANCIAL OFFICER TO THE DEBTORS
(DOCKET ENTRY # 139)

In support of her objection to the Debtors' motion for approval of the employment of CFO Solutions ("CFOS") to furnish the Chief Financial Officer to the Debtors (the "Motion"), Kelly Beaudin Stapleton, United States Trustee for Region 3 ("U.S. Trustee"), by and through her counsel, avers:

INTRODUCTION

1. Under (i) (an) applicable order(s) of the United States District Court for the District of Delaware issued pursuant to 28 U.S.C. § 157(a) and (ii) 28 U.S.C. § 157(b)(2)(A), this Court has jurisdiction to hear and determine the Motion.

2. Under 28 U.S.C. § 586, the U.S. Trustee has an overarching responsibility to enforce the laws as written by Congress and interpreted by the courts. See United States Trustee v. Columbia Gas Sys., Inc. (In re Columbia Gas Sys., Inc.), 33 F.3d 294, 295-96 (3d Cir. 1994) (noting that U.S. Trustee has "public interest standing" under 11 U.S.C. § 307 which goes beyond mere pecuniary interest); Morgenstern v. Revco D.S., Inc. (In re Revco D.S., Inc.), 898 F.2d 498, 500 (6th

1

Cir. 1990) (describing the U.S. Trustee as a "watchdog").

3. Under 11 U.S.C. § 307, the U.S. Trustee has standing to be heard on the Motion and the issues raised in this objection.

GROUNDS/BASES FOR RELIEF

4. The U.S. Trustee objects to the Motion on the grounds identified below.

5. In evaluating requests by debtors in possession to temporarily employ officers pursuant to 11 U.S.C. § 363, this Court has generally followed a "crisis management protocol" that was the outgrowth of litigation initiated by the U.S. Trustee several years ago. A copy of the protocol is attached as Exhibit A.

6. Prior to filing this objection, the U.S. Trustee approached the Debtors and sought the Debtors' agreement that certain provisions of the crisis management protocol would apply to the proposed engagement. Those provisions are as follows:

(a.) "One hat" --The protocol requires that the firm providing the temporary employee (the "Furnishing Firm" agree that it will only serve in that one capacity in the case(s) at issue. Ex. A ¶ 1(A).

(b.) No service as director -- The protocol requires that the Furnishing Firm agree that its personnel will not serve as directors during the case(s) at issue. Ex. A ¶ 1(D), 1(E)(3) n.3.

(c.) Initial/continuing disclosure of connections -- The protocol provides that the Furnishing Firm will disclose connections with parties in interest and update that disclosure periodically. Ex. A ¶ 1(E, F).

2

(d.) Quarterly review of compensation/reimbursement paid -- The protocol requires quarterly review of compensation/reimbursement paid to the Furnishing Firm, with an opportunity for parties in interest to object. Ex. A ¶ 2(C).

(e.) Indemnity for officers, but no indemnity for firm -- The protocol provides that, to the extent that personnel provided by the Furnishing Firm will serve as officers, such personnel will receive indemnity consistent with that provided to other officers under corporate bylaws. The protocol also expressly requires that the Furnishing Firm will not be indemnified. Ex. A ¶ 3.

7. The U.S. Trustee understands that the Debtors are presently not willing to agree to any of the aforementioned provisions. The U.S. Trustee believes that this Court has the inherent authority to condition its approval of the employment of temporary executive personnel by a chapter 11 debtor in possession on the Debtors' conformity with accepted practice within this District. Accordingly, the U.S. Trustee objects to the Motion to the extent the Debtors and/or CFOS are not willing to comply with the crisis management protocol.

[Continued on next page -- space intentionally left blank]

3

CONCLUSION

WHEREFORE the UST requests that this Court issue an order denying the Motion or granting other relief consistent with this objection.

Respectfully submitted,
KELLY BEAUDIN STAPLETON
UNITED STATES TRUSTEE

BY: /s/ Joseph J. McMahon, Jr.
Joseph J. McMahon, Jr., Esquire (# 4819)
Trial Attorney
United States Department of Justice
Office of the United States Trustee
[address, phone, fax]

Date: November 13, 2007

4


  


US Trustee Objects to SCO's Proposed Asset Sale and more | 227 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Off topic here
Authored by: russellphoto on Wednesday, November 14 2007 @ 12:47 AM EST
Please make links clickable.

Russellphoto

"I wish I had 10 friends like you, cause I have 20."

[ Reply to This | # ]

News Picks Here
Authored by: russellphoto on Wednesday, November 14 2007 @ 12:49 AM EST
Please post the title of your news with your postings.

Russellphoto
"I drank what?" -- Socrates

[ Reply to This | # ]

NewsPicks Comments Here, Please....
Authored by: perpetualLurker on Wednesday, November 14 2007 @ 12:50 AM EST

Comments in the title, please.....


.................pL..................




---
"Work like you don't need the money. Love like you've never been hurt. Dance
like nobody's watching." -- Leroy "Satchel" Paige

[ Reply to This | # ]

US Trustee Objects to SCO's Proposed Asset Sale and more
Authored by: thatseattleguy on Wednesday, November 14 2007 @ 12:57 AM EST
All I can say is...wow. Reading through #202 (the objection to the asset sale),
I wasn't sure if I was reading something that the Trustee had written - or if
somehow my browser had cross-linked to Novell and IBM's filings on the same
issue. Large sections sound like verbatim copies of what the Nazgul and MoFo
had already told the court.

It's getting very, very interesting - and for once, really fun - out there...

[ Reply to This | # ]

US Trustee Objects to SCO's Proposed Asset Sale and more
Authored by: thatseattleguy on Wednesday, November 14 2007 @ 01:14 AM EST
From #201:

The U.S. Trustee understands that the Debtors are presently not willing to agree to any of the aforementioned provisions...

Seven standard provisions relating to hiring temporary employees when you're in Chapter 11, and SCO doesn't want to agree to even one of them?

Aside whether that's reasonable and fair, it sure doesn't seem at all- well, rational to show this kind of cheek and defiance to the Trustee over something that's really trivial in the big picture. Especially when you're going to have to work closely with them, and get some assumption of your own good faith from them, over the coming months and beyond. Why start out your relationship, and get them working against you, with a stupid fight over something you could easily give in on?

So the perennial question, again: what exactly is SCO thinking, and just what are they hoping to accomplish by this particular course of action?

[ Reply to This | # ]

Out of the frying pan ...
Authored by: Anonymous on Wednesday, November 14 2007 @ 01:28 AM EST
I would have stayed in the frying pan if I were SCO. Interesting objections in
#202 about privacy - not sure if this was fully treated in IBM's objections.
But this impartial opposition does not bode well for SCO's chances of keeping
Novell's assests out of reach. Can't wait till the next hearing. Ho ho ho!

[ Reply to This | # ]

US Trustee groks SCO
Authored by: Anonymous on Wednesday, November 14 2007 @ 01:38 AM EST
"Per the Debtors’ public filings, the success of the Linux
"litigation hinges upon the Debtors’ ability to establish
"ownership of certain intellectual property rights,
"the same rights which the United States District Court
"for the District of Utah recently found were owned by Novell.
"Further, it is unclear whether Hipcheck and Me Inc. Mobile
"products are market-ready."

IOW you can't sell something you haven't got, at least not while
you're in BK and we're watching. Oh, and BTW those
bid protections are about 4 times what this court usually
approves. Why is there a smell of fish?

[ Reply to This | # ]

US Trustee Objects to SCO's Proposed Asset Sale and more
Authored by: dio gratia on Wednesday, November 14 2007 @ 01:50 AM EST
So, which comes first Chapter 7, or a case trustee and examiner?

[ Reply to This | # ]

Appeals from bankruptcy court
Authored by: thorpie on Wednesday, November 14 2007 @ 02:51 AM EST

Anyone have any idea on what appeals to the Bankruptcy Court decisions are like?

I mean can they cause this to drag on. When the judge permits Kimball to proceed, and permits the arbitration to proceed, will they be able to delay the implementation by appealing?

Any ideas?

---
The memories of a man in his old age are the deeds of a man in his prime - Floyd, Pink

[ Reply to This | # ]

Common Sense ... sweet, sweet Common Sense
Authored by: Anonymous on Wednesday, November 14 2007 @ 03:21 AM EST
We've talked about "Nazgul", but this is on a different level. This is
like the cold clear Eye of Sauron has focused pitilessly on SCO. This is some
high-class lawyerin' we're getting now, this is no-holds-barred stuff.

IBM and Novell and everyone else had to walk on eggshells and not hurt SCO's
feelings for so long. Now the U.S. Cavalry has come over the hill with guns
blazing.

Metaphors and arbitray references mixed while you wait.

[ Reply to This | # ]

Now the trustee is talking about good faith
Authored by: Anonymous on Wednesday, November 14 2007 @ 04:05 AM EST
While such details are relevant to determining whether the Debtors conducted the sale process in good faith (an issue that will be addressed at a later hearing in the event bidding procedures are approved), they are also relevant to evaluating whether this Court should endorse the Debtors' suggested timetable for the auction and sale. The Debtors should make a record regarding their pre-Term Sheet marketing efforts which justifies the relief they are seeking from this Court. Consumer Privacy Under 11 U.S.C. § 363(b)(1)
The trustee hasn't accused them of bad faith. The trustee has, however, pointed out that they haven't demonstrated good faith.

[ Reply to This | # ]

US Trustee Objects to SCO's Proposed Asset Sale and more
Authored by: Ian Al on Wednesday, November 14 2007 @ 04:30 AM EST
I found this interesting and I was impressed by the skillful skewering of the
York proposals. I assume that the care about the security of personal
information is one of the areas that the (representative of the) US Trustee has
to deal with as there is no other entity in the case with such a responsibility.
I don't recall and I would not expect Novell or IBM to have cited it.

I think the US Trustee questions York's motives. He points out that MeInc is
well short of saleable as a product range and that the courts have found that
the Unix assets are not SCO's to sell. The only thing he, and the creditors,
seem to have missed is the saleability of MeInc assets when they are patent
encumbered by separately selling the underlying patent to a patent troll. (I
know, I know, we don't know who bought it, but who else if not a troll?). He
asks himself what York gains if the sale falls through.

Then he looks at all the bid-protection triggers and points out that there are
several ways that this could happen such that York would get an undeserved
windfall. He seems to think the sale must fail and that there is something else
behind this sham bid. I was particularly keen on his idea that bid protection
should only be triggered *after* the start of the reorganisation plan. It's as
if he knows that, after the gutting of the SCO asset's, that cannot ever
happen.

Spector has already said in court that, if SCO can sell something of doubtful
value, then the court should let it. Caveat Emptor. Please give your blessing
without seeing the APA. All you need to see is the painted pig in the hessian
sack.

If he were the bus driver, I'd walk.


---
Regards
Ian Al

Linux: Genuine Advantage

[ Reply to This | # ]

US Trustee is a FEMALE, her attorney is MALE
Authored by: jcjodoin on Wednesday, November 14 2007 @ 05:03 AM EST
OK,

A bit of a nitpick here.

The US Trustee is a FEMALE, her attorney / counsel is a MALE.

Please get this right people. For a group that is so
interested in making sure that everyone else gets it right
(ie MOG, etc.) and corrects them, mocks them, etc. when
they are wrong (and in some cases exceedingly wrong if there
were such a thing), this group is getting a bit sloppy.

Please be sure to take care about taking care of the gender
and name of the US Trustee: Ms. Kelly Beaudin Stapleton, United States Trustee
for Region 3
and her cousel: Joseph J. McMahon, Jr., Esquire (# 4819)
Trial Attorney
United States Department of Justice
Office of the United States Trustee

Thank you.

jeffrey

[ Reply to This | # ]

Doesn't Novell have a veto?
Authored by: jrvalverde on Wednesday, November 14 2007 @ 05:36 AM EST
As far as I remember (and nobody seems to point this out), NOVELL reserved in
the APA the right to veto any transfer of assets from SCO to other companies.
That means that if any UNIX assets are to be sold, NOVELL could object and veto
the sale.

Am I wrong? And, when should Novell state their opposition to the sale using
their priviledge from the APA?



---
Jose R. Valverde
EMBnet/CNB

[ Reply to This | # ]

Does an objection by the trustee carry great weight?
Authored by: billyskank on Wednesday, November 14 2007 @ 05:48 AM EST
I ask because the trustee is the party with no dog in this fight.

---
It's not the software that's free; it's you.

[ Reply to This | # ]

Corrections Here
Authored by: groklawdranem on Wednesday, November 14 2007 @ 06:27 AM EST
a little late but missing above

[ Reply to This | # ]

US Trustee Objects to SCO's Proposed Asset Sale and more
Authored by: Steve Martin on Wednesday, November 14 2007 @ 07:11 AM EST

"Per the Debtors' public filings, the success of the Linux litigation hinges upon the Debtors' ability to establish ownership of certain intellectual property rights, the same rights which the United States District Court for the District of Utah recently found were owned by Novell. "

YES!! The UST owns a ClueBat!!

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"When I say something, I put my name next to it." -- Isaac Jaffee, "Sports Night"

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What's Ralph doing?
Authored by: Anonymous on Wednesday, November 14 2007 @ 07:26 AM EST
I nominate Yarro for CFO.

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Jay Alix & Associates?
Authored by: Jaywalk on Wednesday, November 14 2007 @ 09:30 AM EST
Hmm. It looks like the US Trustee's beef with SCO appointing a CFO is that SCO doesn't want to agree to follow the "crisis management protocol" document. That's Exhibit A for #201. Then if you look up Exhibit A, you'll find that -- although #201 makes it sound like the US Trustee created the protocol -- the document appears to be generated by a firm called Jay Alix & Associates. Doing a bit of poking around I found an old interview with someone in the company. Apparently they're a turnaround firm with some well-established street cred.

Did SCO bring these guys on-board to handle their interim staffing, or is the US Trustee just using one of their old documents which he has found useful? In either case, it sounds like SCO doesn't want to play by established rules. Combined with their rush to sell off their own assets it sounds like they're not really planning a Chapter 11 reorganization at all. They're just using it to game the system so they can do a liquidation on their own terms.

But it sounds like the US Trustee isn't going to let them play.

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===== Murphy's Law is recursive. =====

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US Trustee is an accomplished prosecutor
Authored by: peecee on Wednesday, November 14 2007 @ 09:49 AM EST
Doing a few searches, it would appear that Ms. Stapleton is an accomplished
Fraud Prosecutor. I don't know if SCO counted on that, but I think she's going
to bring the hammer down on SCO pretty hard. I'm thinking Gallagher, a large
wooden sledgehammer and a watermellon... I've got my plastic sheet and raincoat
ready!

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Let me make one thing perfectly clear!
Authored by: artp on Wednesday, November 14 2007 @ 09:51 AM EST

She certainly did.

"an uncommitted bid does not deserve such protections."

"a $10 million financing commitment that, if tapped, will be a liability of the Debtors' estates"

"hinges upon the Debtors' ability to establish ownership of certain intellectual property rights, the same rights which the United States District Court for the District of Utah recently found were owned by Novell."

"for example, if the cases convert to cases under chapter 7 and a trustee sells the assets at a liquidation price six months from now, the Debtors' estates will not have received a benefit from the Proposed Purchaser's "floor" bid in connection with such a sale."

"Absent authority supporting the argument that this Court has the authority to elevate bid protections to superpriority administrative expense status, this Court should reject the Debtors' proposal."

"The U.S. Trustee reserves the rights to be heard on and/or to object to any matters relating to the proposed sale, said matters being expressly reserved for a subsequent sale hearing."

What is being made perfectly clear is that tSCOG should, to paraphrase in Iowegian, "sit down, shut up, and behave yourself. It's not time for you to talk yet."

I'm sure that the Trustee is not going out of her way to make a point on tSCOG. She is just doing what the law tells her to do, and what she has done with dozens of other Chapter 11 companies: to remind them that they have given up control of the fate of their company in return for protection by the Bankruptcy Court, and that they need to follow the rules that they agreed to.

tSCOG will not be able to flout the laws here. Their options are much more limited, as they have signed over certain rights for the privilege of the Court's protection.

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Userfriendly on WGA server outage:
When you're chained to an oar you don't think you should go down when the galley sinks ?

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High Speed Comeuppance
Authored by: Anonymous on Wednesday, November 14 2007 @ 10:57 AM EST
It took Judges Kimball and Wells some years to be in a position to drop the
hammer on SCO. Likely they caught on to SCO's game earlier on, but had to wait
for the discovery and motions to work their way through the process.

The US Trustee has just shown that things work <b>much</b> faster in
her bailiwick and that she's calling the shots -- not SCO.

Before, the Titanic was on a leisurely course for the shoals, but an iceberg
just got in the way and is ripping out the bottom.

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  • Titanic - Authored by: Anonymous on Wednesday, November 14 2007 @ 11:23 AM EST
  • Unfortunately - Authored by: Anonymous on Wednesday, November 14 2007 @ 02:58 PM EST
What happens to the counterclaims?
Authored by: Anonymous on Wednesday, November 14 2007 @ 11:39 AM EST
With all of the talk of SCO selling it's lawsuit "pig in a poke" I've
lost track of who gets the liability of the counterclaims. It seems like the
only way these assets have any (non negative) value is if the counterclaims stay
pointed at the bankrupt SCO but that seems unfair to SCO's victims, not to
mention completely messing up the current litigation. What am I missing?

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Isn't selling stolen property illegal
Authored by: Anonymous on Wednesday, November 14 2007 @ 11:41 AM EST
thats what SCO is trying to do so, no matter who buys it gets a legal wack in
the end and a new small little company aint gonna last anywhere near as long as
SCO did, PERIOD.
ANYWAY this happens it will come out in the wash properly.

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U.S. Trustee limiting wiggle room :) Nice one!
Authored by: SilverWave on Wednesday, November 14 2007 @ 12:09 PM EST
It is worth repeating:

7. The U.S. Trustee understands that the Debtors are presently not willing to
agree to any of the aforementioned provisions. The U.S. Trustee believes that
this Court has the inherent authority to condition its approval of the
employment of temporary executive personnel by a chapter 11 debtor in possession
on the Debtors' conformity with accepted practice within this District.
Accordingly, the U.S. Trustee objects to the Motion to the extent the Debtors
and/or CFOS are not willing to comply with the crisis management protocol.

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Software Patents are leeches on the creativity of mankind.

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SCO code of conduct
Authored by: Anonymous on Wednesday, November 14 2007 @ 01:19 PM EST
Wonder who thier ethics officer is, and if the board approved doing business
with Kevin McBride?

Sco's code of ethics clearly states:

No employee that is not a director or officer without the specific permission of
our Company Ethics
Officer, and no director or officer without the approval of a majority of our
Audit Committee members, shall:
• conduct business on behalf of SCO with immediate family members, which
include spouses,
children, parents, siblings and persons sharing the same home whether or not
legal relatives.

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64K$ questions ...
Authored by: Anonymous on Wednesday, November 14 2007 @ 04:37 PM EST


Where is MOG ? - is she writing anything about this

Where is Enderle, Where is (name all the paid hacks)

Their reputations must surely be also sinking lower along with SCO's long term
chances for existance.

D

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hiring a CFO from a temp agency...
Authored by: Anonymous on Friday, November 16 2007 @ 04:28 PM EST
...that's class. don't mistake it folks, these people are goooood, otherwise
they'd have disappeared a long time ago.

right and wrong seems to be defined by how it affects SCOG.

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