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| Mesirow: We'd Like a Cool Half Million From SCO, Please - Updated |
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Friday, December 21 2007 @ 10:00 AM EST
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Mesirow Financial Consulting, having been approved [PDF] as one of the professionals SCO can retain to provide services, says it would like almost half a million for having done so for the past two and a half months. Hey. Me too! I'd like a cool half million. Where's the line? I want to get on it.
You'll recall that the U.S. Trustee's Office objected to their original application, because "it appears that MFI, Mesirow’s affiliated broker-dealer, believes that it may purchase and sell the Debtors’ securities for its own account without affecting Mesirow’s eligibility for professional employment in these cases." Also there were issues about indemnification, a clause about it being in the prepetition Engagement Letter, but which the court whittled down to manageable size. And Mesirow swore they wouldn't trade in any SCO shares, if they got retained. And indeed, from the bill it's plain on which side of the bread one might find the butter.
This is their first bill since being approved. Yessir. $449,702.30. For 1,263 hours of services rendered by 11 people, and that includes $48,702.11 for expenses. Love the 11 cents. They say it's "actual, reasonable and necessary". They nobly reduced the bill voluntarily from $535,626.00 down to $449,888.30. So the court doesn't have a heart attack, I'd surmise. In the motion, they say it happened like this:
Pursuant to our Employment Application and Retention Order, with respect to this engagement, all other services, as requested by the Company, and agreed to by MFC, shall be billed at MFS's normal and customary rates less a 10% discount as determined under the rate structure. It may be in there, and I just missed it, but wasn't Mesirow already paid a retainer of $35,000 that the Order said should be used as an offset?
So. Reasonable and necessary. Not to mention a bargain. Especially, a cynic might say, if the goal is to drain SCO of all possible assets before the trial in Utah finishes up. Or perhaps it's just natural to some to check a man's pockets and take what you can, when you find him battered and dying by the side of the road. Yes, kidding around, but this is a lot of money, any way you look at it. If you look at the breakdown, a lot of it was about the failed York deal. At least half, I'd say of the hours, and a chunk of the expenses, in that the bill indicates someone had to go to New York City to negotiate and such with the proposed buyer. And there were trips to Utah too. Lots of them. They reduced their hourlies, I gather, for travel, but still you see on Exhibit C $27,687.95 for air fare and $6,569.42 for ground transportation. I guess rental cars in Utah and cabs in New York City. Exhibit E confirms but there were train rides too, like from NYC to Delaware. And parking fees and car service. So any time you see someone in court you can't identify, guess Mesirow. Heavens, but SCO surely has a lot of hand-holding going on as it sinks beneath the waves. No one seems to be pulling upward though. Lodging is $19,875.01. That sounds like NYC, all right. And indeed you see a couple of employees spent three nights there. But poor Lyle Bauck spent 28 nights in Provo instead, apparently all alone. The meals are all breakfast or dinner. I can just imagine the memo: "We're having to bill 10 percent less than our usual. Skip lunch." I'm joking, but it is rather odd that Exhibit E doesn't show a single lunch, with so many flying here and there since mid-September. No phone charges either. Exhibit D gives you the full breakdown of the hours spent by each employee, at a whopping 53 pages. They probably think no one will go through it all, item by item, but knowing you guys as I do, I'm guessing someone will do a spreadsheet to check if the Mesirow items correspond with previously itemized bills from others so as to verify if, when Mesirow says an employee met with Berger Singerman, Berger Singerman's bills agree. Uh oh. Now what have I done? They'll start billing for verification of truth next. They're already charging for checking PACER. That failed York deal sure ended up costing an arm and a leg. As Mesirow economically explains in the section about actual and necessary expenses, the services rendered "were necessary and beneficial to the estates at the time such services were rendered." In light of the outcome, not so much, one might suggest. I guess that's how economic advisors says, "it seemed like a good idea at the time." Didn't even one of these experts, not just Mesirow but anybody, warn SCO that the odds of the deal being approved as submitted were somewhere between nil and not very likely? Remember I said, when I first read that emergency motion, that I didn't think it would fly?
How come all these fancy professionals couldn't see it and save the estate some money and effort? SCO should seriously hire me instead to give them some *real* advice. I don't know why none of them could see it, or maybe they did but were ignored, but it's the $64 thousand dollar question, as they used to say -- or now, with inflation, it's the half a million dollar question. I have to say, I love bankruptcy court, where money simply flows like wine, and the very best from the cellar. And 10 per cent off. What's not to love? And here I am tap tap tapping away morning, noon and night for nothing. Forsooth, there's an imbalance in the universe, m'lords. And yet, I'm the one that keeps calling it right. Mesirow warns there might be *more* expenses bills coming in later, due to "delays caused by accounting and processing procedures." And if no one objects to this bill, which is likely, or unless the judge holds a hearing, which seems unlikely, this bill is home free. There doesn't seem to be a lot of "what were you thinking?" in bankruptcy court unless someone objects or intervenes.
The filings: 280 -
Filed & Entered: 12/20/2007
Application for Compensation
Docket Text: Monthly Application for Compensation (First) and Reimbursement of Expenses as Financial Advisors to the Debtors for the Period from September 14, 2007 through November 30, 2007 Filed by Mesirow Financial Consulting, LLC. Objections due by 1/9/2008. (Attachments: # (1) Notice # (2) Exhibit A# (3) Exhibit B # (4) Exhibit C# (5) Exhibit D# (6) Exhibit E# (7) Certificate of Service and Service List) (Werkheiser, Rachel)
Update: As you see, no one objected to Dorsey & Whitney's bill:
281 -
Filed & Entered: 12/21/2007
Certificate of No Objection
Docket Text: Certificate of No Objection Regarding First Interim Application of Dorsey & Whitney LLP for Period September 14, 2007 to October 31, 2007 (related document(s)[238] ) Filed by Dorsey & Whitney LLP. (Schnabel, Eric)
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| Authored by: attila_the_pun on Friday, December 21 2007 @ 10:07 AM EST |
| Off topic posts here please [ Reply to This | # ]
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| Authored by: Sean DALY on Friday, December 21 2007 @ 10:07 AM EST |
So PJ can locate them.
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| Authored by: attila_the_pun on Friday, December 21 2007 @ 10:08 AM EST |
| News pick threads here please [ Reply to This | # ]
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| Authored by: Anonymous on Friday, December 21 2007 @ 10:12 AM EST |
I still have problems with SCOX' many advisory firms.
Surely, even the Trustee and the Judge realize that
Darl/BSF/Yarro/M$ are playing three-card-monte here.
(My guess is that the trips to NYC were to learn on
a variety of streetcorners. The 28 days in Provo
were to see how much could be scarfed up from the
hayseeds while perfecting the techniques. No lunch
because it was always on the "fly.")[ Reply to This | # ]
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| Authored by: stats_for_all on Friday, December 21 2007 @ 10:28 AM EST |
| The Mesirow invoice has the first mention of another potential buyer-- They
entered late, but it doesn't appear this trial balloon went anywhere even after
the York deal blew up.
Fasel, Bill ---10/25/07---- Participate in conference
call with J. Sulak (Marlin Equity Partners)
and T. Zoha (MFC) to respond to his
interest in The SCO Group's
Sale Process. Provided an overview of the filing,
ongoing litigation,
Bid Procedures Motion and next steps.
[hours]0.5 --
[rate]650.00 --- [billing]325.00
J. Sulak == Jonah Sulak of LA and SF
Marlin has recently closed a second private equity fund, it has a operating
stable of little software companies (unlike York). Sources:
Fund=
www.reuters.com/article/pressRelease/idUS7137+30-Nov-2007+BW20071130
Aldon
== www.itjungle.com/breaking/bn050907-story02.html
Intuitive ==
www.intuitivemfg.com/News/Press_05/110805_Marlin.htm
Ronco after bankruptcy
== findarticles.com/p/articles/mi_qn4188/is_20070806/ai_n19443708
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| Authored by: uw_dwarf on Friday, December 21 2007 @ 10:39 AM EST |
There doesn't seem to be a lot of "what were you thinking?" in
bankruptcy
court unless someone objects.
allparadox put it
this way in a post on another forum: "Scream or die." If you
don't object now,
you can't object later.
I hope the trustee objects--and that the matter
can't be resolved before a
hearing. Mesirow's take on the "deal" deserves to be
told publicly.
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| Authored by: spambait42c on Friday, December 21 2007 @ 10:50 AM EST |
My own company has a "we don't pay for lunch" policy for expenses when
I'm out of town.
The theory is apparently that you'd be eating breakfast and dinner at home, so
they'll compensate you for that, but you'd be buying lunch anyway.
So it's not completely absurd.[ Reply to This | # ]
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| Authored by: rsteinmetz70112 on Friday, December 21 2007 @ 10:53 AM EST |
Is it just me or does the bill seem out of proportion to the stage the deal was
in?
If the deal had gone through then fees would have been higher, but wouldn't a
prudent purchaser sought to get some indication from the Trustee or the Court
before spending this kind of money?
---
Rsteinmetz - IANAL therefore my opinions are illegal.
"I could be wrong now, but I don't think so."
Randy Newman - The Title Theme from Monk
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| Authored by: TiddlyPom on Friday, December 21 2007 @ 10:55 AM EST |
I am amazed and dismayed at the levels of expenditure of other people's money
that SCO are allowed to get away with! In the UK, if you are bankrupt then you
have to justify every little bit of expenditure (except in the case where you're
a failing Bank and the UK Government is losing face).
I keep
wondering whether there is more to this case behind the scenes (in a conspiracy
theory, X-Files sort of way) as any normal bankrupcy deal should have been dealt
with long ago.
Nearly $450,000 of other people's money is an awful
lot of expenditure to justify under any circumstances but with SCO's business
model (or lack of it) there is no way that they should get away with this. I
would imagine that Novell are somewhat less than impressed by
this.
---
Open Source Software - Unpicking the Microsoft monopoly
piece-by-piece. [ Reply to This | # ]
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| Authored by: Anonymous on Friday, December 21 2007 @ 10:59 AM EST |
When I worked for IBM I learned that lunches weren't eligible for expense report
because, one way or another, you usually buy your lunches, any way, when you go
in to your work-place.
Obviously those who brown-bag are kinda chopped out. [ Reply to This | # ]
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| Authored by: Shadow Wrought on Friday, December 21 2007 @ 11:37 AM EST |
| One of the hardest things to do in civil litigation is client management. Even
though they pay the bills and have final say, there is a true art to making sure
that they don't make stupid mistakes. Sometimes its unavoidable, but it
certainly sounds like SCO either doesn't have, or has gotten rid of, anyone who
will say, "Uh, guys, this isn't going to work."
I onetime worked on a case
where our client was offered a settlement of $20 million. They turned it
down demanding at least $150 million. The niche industry both sides were in
was only a $40 million a year industry. But they wouldn't see it. So they
rejected it, and then their company died before discovery even ended. Wonder if
that $20 mil would have helped?
---
"It's a summons." "What's a
summons?" "It means summon's in trouble." -- Rocky and Bullwink [ Reply to This | # ]
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- Blood Lust - Authored by: Anonymous on Friday, December 21 2007 @ 06:51 PM EST
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| Authored by: TJ on Friday, December 21 2007 @ 11:53 AM EST |
Bauck, Lyle 11/20/07 Calculate interest earned on cash saved due to
the bankruptcy filing. 0.6 350.00
210.00
Exhibit D-10, pp 51. [ Reply to This | # ]
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| Authored by: jdg on Friday, December 21 2007 @ 12:07 PM EST |
Spending a lot of money on what look like impossible arrangements should not be
rewarded. A significant reduction in the amount paid, based on the quality of
the offer, would send a message if the judge could differentiate good assessment
from bad. I do not have they can but...
---
SCO is trying to appropriate the "commons"; don't let them [IANAL][ Reply to This | # ]
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| Authored by: Anonymous on Friday, December 21 2007 @ 12:14 PM EST |
Potential reasons there are no lunch or phone bill reimbursement requests on the
Mesirow bill:
1. If the company provides employees with cellphones, it's easier to just get a
plan with a huge # of minutes with unlimited long distance and just charge the
monthly expense of the plan to overhead than it is to try and bill back a
pro-rated portion of the cellphone expense to the clients. Same for land lines
on phones, with unlimited long distance for a single monthly fee...
2. I have worked at companies that don't reimburse lunch for employees while
traveling, on the theory that you would have bought yourself lunch anyway had
you been working at the office; they reimburse breakfast or dinner because you
could have made the choice to cook for yourself at home had you not been
traveling. The exception is if you are entertaining client personnel in which
case it's reimbursed.
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| Authored by: Anonymous on Friday, December 21 2007 @ 12:31 PM EST |
Really. I am just simply amazed at how fast and much they can drop huge chunks
of cash on things like this. Especially when they knew (or should have known!)
they were going bankrupt.
They aren't running a company, they are operating a scorched earth policy. SCO
might as well come right out and tell Novell and IBM that by the time Darl is
through, they won't see a penny from SCO.
A lot of money has been spent, assests are trying to leave the company through
various deals, and there is still no plan to return SCO to profitability (which
is the goal of Ch11). Motion after motion, bill after bill, lots of time and
effort spend on a myriad of other things around this bankruptcy - yet nothing
appearently on a plan to survive Ch11.
And so far, the bankruptcy court doesn't seem to have figured that out, or at
least done enough to stop it. If I were the judge looking at SCO's assets and
this bill, I would do 1 of two things:
1) Tell Mesirow to get in line after the other creditors
2) Put SCO in Ch7 immediately
It should be increasingly obvious that SCO is trying to drain the company under
the guise of Ch11 protection and leave Novell, IBM, and the other creditors
holding their respective bags. Certainly the US Trustee and the Judge can see
this.[ Reply to This | # ]
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| Authored by: mashmorgan on Friday, December 21 2007 @ 12:31 PM EST |
Spreadsheet.
Anyone into creating the spreadsheet..
Suggest google.. just need some collaborators to play with it ;-)
pete[ Reply to This | # ]
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| Authored by: darkonc on Friday, December 21 2007 @ 12:46 PM EST |
The way I see it, either:
- Mesirow saw that this deal was doomed, said
nothing and just quietly billed up the wazoo anyways. If that's the case, then
they should be paid what it would have taken for them to figure out it was
doomed, and nothing else.
- Having realized, early on, that this case was
doomed, they duly warned SCO's executives. SCO's executives ignored the warning
and insisted on forging ahead, all guns blazing.
If that's the case, then
Darl and Co. should have their management rights pulled out from under them like
a dirty rug. If they're gonna spend this kind of money on a doomed adventure,
then they shouldn't be in control. (especially given that SCO is unlikely to
evade chapter 7, anyways, once Novell gets their day in
court.).---
Powerful, committed communication. Touching the jewel within
each person and bringing it to life.. [ Reply to This | # ]
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| Authored by: Steve Martin on Friday, December 21 2007 @ 12:56 PM EST |
It may be in there, and I just missed it, but wasn't Mesirow
already paid a retainer of $35,000 that the Order said should be used as an
offset?
Looking back at the order approving Mesirow,
it may actually be that they have not yet been paid (at least not officially).
The Order stated:
ORDERED that the Debtors' advance payment
retainer in the amount of $35,000 (the "Retainer") shall be held by
MFC and applied against postpetition fees and expenses, to the extent
allowed by further Order of this Court;
(emphasis
added)
The way I read this, the Court is saying that the Retainer was
paid, but that Mesirow may not actually claim any of it, rather they have to
hold on to the funds (similar to an escrow arrangement) until the Court
explicitly allows them to claim them as applied to their bill. This strikes me
as Mesirow holding the Retainer in escrow until the Court releases the funds,
and perhaps this filing is just Mesirow's first step in accomplishing that
process.
Of course, IANAL nor AIAA (accountant), so I could easily be
wrong.
---
"When I say something, I put my name next to it." -- Isaac
Jaffee, "Sports Night" [ Reply to This | # ]
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| Authored by: Anonymous on Friday, December 21 2007 @ 12:58 PM EST |
They're selling business assets that are supposed to be worth something and
their fee should be mostly commission. Particularly for the sale, maybe coming
up with some of valuation is an direct expense, but the back and forth travel
and negotiations should have been at the sales agency's risk. If they sell it
they get a commission. Not if they do a fire sale should they get paid even if
the seller refuses the offer.[ Reply to This | # ]
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| Authored by: TJ on Friday, December 21 2007 @ 01:03 PM EST |
Exhibit D gives some pretty unambiguous clues as to the identity of "Bidder
1" in various places, if they can be tied to one investment
firm:
Participate in conference call with D. Charnin (Vice
President, Chief Investment Council), C. Hale (Managing Director) and M. Yi
(Associate) of Bidder 1 Capital Management...
(D-9 pp
25)
D. Hale looks likely to be David B. Hale (Chief Investment
Counsel), of Ropes & Gray, Boston,
MA
C. Hale could be James C Hale III of FTVentures who have offices in CA
and NY, and invest mainly in financial software companies.
C. Hale could
also be Charles Hale of Polar Capital Partners
(UK), but that looks less likely.
M. Yi could be Michael M Yi of Lee Anav Chung, head of the New York office. That
said, the name is common and my feeling is
[ Reply to This | # ]
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| Authored by: sproggit on Friday, December 21 2007 @ 01:05 PM EST |
This is just a wild and wacky theory. It might have a grain of truth in it, or
not. Maybe you can help me kick this idea around for a while...
Let's suppose that SCO know that the moment they get into the Utah Court Room
with Judge Kimball that he will seal their fate. SCO also know [or perhaps it
might be more accurate to say that SCO's Pipe Fairy knows] that an unequivocal
slam-dunk judgment against SCO would be tremendous PR for the pro-Linux and
anti-FUD campaign. So basically, any kind of ruling from Judge Kimball spells
d-i-s-a-s-t-e-r [and sorry, but you'd have to be a 'Calvin & Hobbes fan to
grok that] in anybody's language.
So Darl is most likely delighted to have received this demand from Mesirow,
purely because it helps speed him on the way to Chapter 7 and freedom. He just
needs to stay in charge via Chapter 11 to fritter away the last of the cash
before SCO disappear in a puff of logic. The only problem with this outcome is
for the Pipe Fairy. After all, the biggest potential IP Claim against Linux came
from SCO. If Kimball rules that everything belonged to Novell anyway [which I
guess can still happen via Chapter 7] then SCO is toast regardless.
When that happens it's back to Plan B which is the Pipe Fairy claiming that
Linux infringes *their* IP too.
So if my theory is correct, SCO are going to work a tremendous cash burn through
the holiday period, hoping of course that everyone is out on holiday and missing
the show, just to ensure that they are completely finished and into Chapter 7
before the Utah trial starts.
Any takers?[ Reply to This | # ]
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| Authored by: Anonymous on Friday, December 21 2007 @ 01:21 PM EST |
So remind me, how much did SCOG make out of the Cattleback affair, and how much
has Mesirow asked to be paid? Is there some connection? I think we should be
told.[ Reply to This | # ]
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- Cattleback? - Authored by: PJ on Friday, December 21 2007 @ 02:37 PM EST
- Cattleback? - Authored by: Anonymous on Friday, December 21 2007 @ 04:53 PM EST
- Cattleback? - Authored by: PJ on Friday, December 21 2007 @ 07:17 PM EST
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| Authored by: Anonymous on Friday, December 21 2007 @ 03:00 PM EST |
$500,0000
hahaha[ Reply to This | # ]
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- $350 per hour - Authored by: Anonymous on Friday, December 21 2007 @ 05:30 PM EST
- They must pay - Authored by: Anonymous on Friday, December 21 2007 @ 06:00 PM EST
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| Authored by: darkonc on Friday, December 21 2007 @ 05:53 PM EST |
| The retainer was $100K and they charged $105K. It's kinda hard to argue
with that. It's kinda easy, on the other hand, to come up with a complaint bout
a $500K bill on a $35K retainer. ---
Powerful, committed
communication. Touching the jewel within each person and bringing it to life.. [ Reply to This | # ]
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| Authored by: Anonymous on Friday, December 21 2007 @ 07:17 PM EST |
from D-9, 10/25. Tom Allison, who bills at the highest rate ($690/hr), spends
.5 hours 'Prepare bid tracking log for auction process'!
They have never done this before? They have never heard of admins, jr partners,
interns?
What an insane waste of $$$$$s.[ Reply to This | # ]
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| Authored by: samhdaniel on Friday, December 21 2007 @ 07:44 PM EST |
If I missed this somewhere along the way, I apologize in advance:
What's to stop SCO from waiting until the day before the re-scheduled trial
starts and then declaring Chapter 7 bankruptcy? Are there any restrictions?
Not only would that leave Novell holding the bag, but many of the issues from
the IBM and Red Hat cases would not be legally resolved, leaving Linux open to
more legal challenges of this type.
Ever since SCO filed for Chapter 13, I've had the feeling that this was the
plan.
---
To crash Linux, you really have to work at it.
To crash Windows, you just have to work on it.[ Reply to This | # ]
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| Authored by: Anonymous on Saturday, December 22 2007 @ 03:45 AM EST |
Actually, looking at the details I think this is, imho, a valid claim. After all
it is not the, again imho, this firm that has to do the juridical evaluation of
whether or not such a deal as the york deal would go through. It is however the
responsibility of the company management (SCO) to evaluate whether or not the
deals can be pulled of. This firm just handles the negotiations. But then again,
I have no detailed knowledge about the intricacies above the details given in
the above document, so I might be completely wrong.
Merry X-mas and a happy new year![ Reply to This | # ]
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| Authored by: Anonymous on Saturday, December 22 2007 @ 05:30 AM EST |
I'd like to think that SCO thinks that if it drains the bankruptcy
estate of money, that, once it's gone, everyone will go away,
and Kimball's conversion ruling will become irrelevant.
Then, I'd like to think that the only remaining remedy would
be criminal charges of grand theft, complete with principals
and accomplices. Name your favorite suspects.
Actually, I would rather see criminal charges than civil remedies.
[ Reply to This | # ]
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| Authored by: chad on Tuesday, December 25 2007 @ 10:44 PM EST |
| That's reasonable? [ Reply to This | # ]
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