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Novell expresses "concerns" about Mesirow's bill - and more bills flood in
Wednesday, January 09 2008 @ 07:46 PM EST

Novell has filed a Statement [PDF] expressing concerns about the cool half million that Mesirow Financials has submitted a bill for. It would like to express its concern over SCO's "astonishing" level of spending:
2. As a substantial creditor and party-in-interest, Novell is concerned by the astonishing level of fees and expenses generated at the Debtors' behest, given the lack of progress in these chapter 11 cases.

Novell details its concern regarding the Mesirow bill: it spent over 600 hours and in excess of $250,000 on analysis of a deal "for which no definitive value has been realized." He means the now dormant, withdrawn and maybe totally dead York deal, the one the York lawyer and SCO told the court had to be done by the end of December or it was off. Since the motion asking to do the deal was withdrawn, Novell thinks half a million "may be excessive." Hunh. You think?

And here come more bills from more professionals just doing what they do in the ordinary course for a fee, or so they represent to the court. There's an Affidavit [PDF] from Jackson Hole Advisors, for example, telling the court that its usual fee is $2,650. Um, would that be per year, per month, per day, per hour, or per minute? They fail to say, which leaves the door to the remaining, though rapidly diminishing, SCO monies nicely wide open, I'd say. Novell, of course, views it as its money SCO is squandering.

Novell expresses concern about appropriateness of the activities, too, on top of its worries about amounts. Mesirow spent over 350 hours and $100,000 on court filings. That's not even counting the York deal. Might that be duplicative of what the SCO lawyers are doing? SCO only has, what is it now, four law firms? Mesirow is a financial advisor. Further, Novell believes it might be worthwhile to "inquire whether Mesirow should be doing certain subsets of this work at all." Novell points out that some tasks may be "overstaffed." This appears to be draining the estate. And why might that be? Novell has an idea.

Here's how it delicately phrases it to the court:

4. As these few examples demonstrate, moreover, it appears that a major reason for the massive accumulation in fees so quickly in the case is that the Debtors themselves are employing their professionals on unrealistic tasks that are both inappropriate and inefficient to the estates, as well as failing to responsibly manage the professionals.

5. In sum, Novell is troubled by the lack of progress in these chapter 11 cases when compared to the remarkably high expenditure of fees and expenses by the Debtors' professionals. Given that the Debtors' financial resources are thin, at best, this issue is especially significant. Indeed, at this rate, without a miracle there will soon be nothing left for prepetition creditors.

Novell ends by reserving its right to object to the amount on final application to the court, as well as to any future bills, and it expressed its concerns also, it says, "with the intent of inducing the Debtors and their professionals to be more thoughtful about their activities and the attendant costs to the estates." Like *they* care.

Novell knows they don't care, probably suspects by now this may be a hustle and that the spending is deliberate, so why even file this? Because Novell is building a record and educating the judge as to precisely what type of picture is before him. It ain't over 'til it's over. This bill discussion is by no means over. Don't forget that on top of the bill Mesirow submitted, it warned it wasn't all-inclusive, due to bookkeeping practices, and more bills could be expected.

I suspect too Novell is getting into position to try to shove SCO into Chapter 7 if only to staunch the money bleed and to get someone else at the helm running the SCO show. At least, that's what I'd be trying to do. And Novell hopes some of the bills going forward will at least be less flagrantly excessive, even if only out of fear. If not, it's in position now to object more effectively. But in the beginning of every case, the court is inclined to give parties the benefit of the doubt.

I guess as a general rule of thumb, you could say that courts really aren't set up to handle hustlers early in the process. But they usually get there. Not calling anyone a hustler, you understand. Just talking in general terms here. I believe you can reach your own conclusions, and if anything in the world can help you do it, I'd say it's these bills.

The filings:

295 - Filed & Entered: 01/07/2008
Application for Compensation
Docket Text: Monthly Application for Compensation (Second) and Reimbursement of Expenses, as Co-Counsel to the Debtors and Debtors in Possession, for the Period from October 1, 2007 through October 31, 2007 Filed by Pachulski Stang Ziehl & Jones LLP. Objections due by 1/28/2008. (Attachments: # (1) Notice # (2) Exhibit A# (3) Certificate of Service and Service List) (Werkheiser, Rachel)

296 - Filed & Entered: 01/08/2008
Affidavit
Docket Text: Affidavit of Ordinary Course Professional Jackson Hole Advisors Filed by The SCO Group, Inc.. (Attachments: # (1) Affidavit of Service and Service List) (Werkheiser, Rachel)

297 - Filed & Entered: 01/08/2008
Minute Entry
Docket Text: Minutes of Hearing held on: 01/08/2008
Subject: OMNIBUS HEARING. (vCal Hearing ID (57217)). (related document(s) [293]) (SS, ) Additional attachment(s) added on 1/8/2008 (SS, ).

298 - Filed & Entered: 01/08/2008
Order on Motion to Amend
Docket Text: Order (I)Amending Employee Wage Order To Increase Certain Caps And (II)Authorize the Payment of The Amended Amounts To Certain Employees (Related Doc # [279]) Order Signed on 1/7/2008. (JSJ, )

299 - Filed & Entered: 01/08/2008
Order
Docket Text: Order Approving Assumption of Nonresidential Real Property Leases With GRE Mountain Heights Property LLC and Canopy Properties, Inc. (related document(s)[278] ) Order Signed on 1/8/2008. (LCN, )

300 - Filed & Entered: 01/08/2008
Application for Compensation
Docket Text: Monthly Application for Compensation (Third) for Services and Reimbursement of Expenses as Accountants to the Debtors for the Period from December 6, 2007 through January 4, 2008 Filed by Tanner LC. Objections due by 1/28/2008. (Attachments: # (1) Notice # (2) Exhibit A # (3) Certificate of Service and Service List) (Werkheiser, Rachel)

301 - Filed & Entered: 01/08/2008
Affidavit/Declaration of Service
Docket Text: Affidavit/Declaration of Service (and Service List) Regarding [Signed] Order (I) Amending Employee Wage Order to Increase Certain Caps and (II) Authorize the Payment of the Amended Amounts to Certain Employees (related document(s)[298] ) Filed by The SCO Group, Inc.. (Werkheiser, Rachel)

302 - Filed & Entered: 01/08/2008
Affidavit/Declaration of Service
Docket Text: Affidavit/Declaration of Service (and Service List) Regarding [Signed] Order Approving Assumption of Nonresidential Real Property Leases with GRE Mountain Heights Property LLC and Canopy Properties, Inc. (related document(s)[299] ) Filed by The SCO Group, Inc.. (Werkheiser, Rachel)

303 - Filed & Entered: 01/09/2008
Statement (B)
Docket Text: Statement Regarding First Monthly Application of Mesirow Financial Consulting, LLC for Compensation and Reimbursement of Expenses as Financial Advisors to the Debtors for the Period from September 14, 2007 through November 30, 2007 (related document(s)[280] ) Filed by Novell, Inc. (Attachments: # (1) Certificate of Service) (Simon, Christopher)

  


Novell expresses "concerns" about Mesirow's bill - and more bills flood in | 418 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections
Authored by: ankylosaurus on Wednesday, January 09 2008 @ 07:50 PM EST
"mitsake" -> "mistake" in the title is good too...

---
The Dinosaur with a Club at the End of its Tail

[ Reply to This | # ]

Off Topic Discussions
Authored by: ankylosaurus on Wednesday, January 09 2008 @ 07:53 PM EST
Please remember to make links clickable and to post in HTML.

---
The Dinosaur with a Club at the End of its Tail

[ Reply to This | # ]

New Picks
Authored by: ankylosaurus on Wednesday, January 09 2008 @ 07:59 PM EST
Commentary on the RH side of the Groklaw home page.

---
The Dinosaur with a Club at the End of its Tail

[ Reply to This | # ]

Chapter 7
Authored by: thatseattleguy on Wednesday, January 09 2008 @ 08:03 PM EST
So help me understand the ramifications if SCO goes Chapter 7 before, or during, or immediately after the Utah trial.

- If they go Chapter 7 before (or during) the Utah trial, how would the trial proceed at all, when there would be no SCO and certainly no (paid) counsel for Novell to argue against? What do you do in such cases - sue the executor of the estate?

- If they go C7 after the trial, where would Novell stand in line to get a shot at some kind of their remaining assets (especially any software licences)? Would their court victory give Novel any kind of superpriority over the other pre-petition creditors? Or does that depend on the nature of the ruling (not just how many dollars it's for)?

- Even absent the whole Utah court decision, how does a firm get carved up once it's in Chapter 7? I assume there's a fire sale and the creditors get to divy up the proceeds, but where would Novell fit into that? Would the APA allow it to recall its licences without any further ado?

- And is there even a court date for Utah yet? What's the holdup there (I may have missed something...)

thanks /ThatSeattleGuy/

[ Reply to This | # ]

Somebody help me out here...
Authored by: Jude on Wednesday, January 09 2008 @ 08:33 PM EST
Why would SCO be doing this? It may be tempting to think it's just for spite,
but I haven't known many business people to operate this way. They're usually
in it for the money, and every dollar SCO spends on these services is one less
dollar for Darl & Co. to siphon into their own pockets.

So what's going on? Ideas, anyone?

[ Reply to This | # ]

Novell expresses "concerns" about Mesirow's bill - and more bills flood in
Authored by: Bill The Cat on Wednesday, January 09 2008 @ 08:34 PM EST
...the court is inclined to give parties the benefit of the doubt...

It would seem to me that if a case has this big of a financial impact on this
many people that the court would be negligent in their due diligence if they did
not at least review what has been going on in Utah. Thus, if the court is
taking the approach that all is fair until proven otherwise, they are negligent.
The court should NOT give the parties the benefit of the doubt but, rather,
give the creditors the maximum protection possible.

Put it another way, If this were not a court but, rather a company handling the
proceedings, the company could be sued for the damages already incurred. Thus,
a company would be a lot more careful and thorough than this court has been.
Because this is a court, they are immune from scrutiny and, they appear to not
care.

I've said on these pages many times that Novell will get nothing. Many have
said I am wrong. I've said that the bad guys are winning. It still appears
that way. Novell appears to concur too at this point in time. This is a
reflection of how our judicial system operates today and, that is certainly not
the way it was ever intended to.

---
Bill The Cat

[ Reply to This | # ]

Novell expresses "concerns" about Mesirow's bill - and more bills flood in
Authored by: JamesK on Wednesday, January 09 2008 @ 08:51 PM EST
What happens when the Utah court says SCO is spending Novell's money. Do these
lawyers etc., get to keep what's been determined to be stolen funds? Do Darl
& friends ever get to be held responsible for this?


---
May the source be with you.

[ Reply to This | # ]

Connections Here
Authored by: mattflaschen on Wednesday, January 09 2008 @ 09:32 PM EST
I find it interesting to compare the effort expended by each firm in filling out
its Declaration. Some actually make it read coherently (e.g. No connections
were found) while others say things like "The following connections were
found: N.A.". Jackson Hole just has:

"the Firm's search of the database identified the following
connections:

DISCLOSE CONNECTIONS HERE"

It just makes you wonder.

[ Reply to This | # ]

Novell expresses "concerns" about Mesirow's bill - and more bills flood in
Authored by: Anonymous on Wednesday, January 09 2008 @ 10:36 PM EST
you could say that courts really aren't set up to handle hustlers early in the process.
One might think that if any court were set up to handle hustlers on a regular basis, it would be BK court. They must get more than their fair share of them.

[ Reply to This | # ]

Pachulski Stang Ziehl & Jones LLP photocopy bill is mindboggling
Authored by: Anonymous on Thursday, January 10 2008 @ 02:02 AM EST
I was looking through the Pachulski Stang Ziehl & Jones LLP bill and ran
across the "reproductions" charge of $1925.10. They charge $0.10 for
every reproduction so that means they ran 19251 copies off their copy/fax
machine?!? Holy crud! In just one month alone?!

That's a heck of a lot of copies/faxes. Makes me wonder if that was overdone.

[ Reply to This | # ]

But they usually get there.
Authored by: billyskank on Thursday, January 10 2008 @ 06:23 AM EST
Before or after the money runs out?

What I don't understand is, why does SCO care whether Novell gets its money or
not? SCO is doomed now, everyone knows it, so it seems that the only game left
is to spend all the money before Novell can get it. But why? This money is only
going to third parties: lawyers, mainly. What's the purpose behind that, is it
merely spite? Is it SCO saying "we lost, but we're going to do our best to
make sure you never see any of this money either"?

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

[ Reply to This | # ]

Novell expresses "concerns" about Mesirow's bill - and more bills flood in
Authored by: Anonymous on Thursday, January 10 2008 @ 10:53 AM EST
Strategy,

Object now or you can't later seems to be the legal way. So Novell should be
objecting to all SCO spending now. Then when Novell wins and SCO is shown to
have been spending Novell's money for the last couple of years the question will
only be on the issue of liability. If Novell can prove negligence and/or malice
in SCO's behavior then individuals become responsible.

[ Reply to This | # ]

Judge Gross doesn't get it
Authored by: Anonymous on Thursday, January 10 2008 @ 12:06 PM EST
Or he is pretending not to.

In any case he is being made to look like a fool by SCO.

No matter what he does it won't save SCO, so why not show some backbone and at
least some interest in fairness, not just to Novell, but to the dozens of small
creditors being stung by this mess.

[ Reply to This | # ]

A major asset
Authored by: joef on Thursday, January 10 2008 @ 12:07 PM EST
I have lost track of some of the threads in this discussion. New posts come in faster than I can keep up. Forgive me if this is a repeat! But since SCO's major legal costs are prepaid through appeals, can't our hypothetical trustee in Ch. 7 continue the case despite the lack of cash in the coffers -- on BSF's dime?

If so, this would apply to those cases that SCO initiated. Would it also apply to the Red Hat case?

[ Reply to This | # ]

  • A major asset - Authored by: PJ on Thursday, January 10 2008 @ 01:25 PM EST
Jackson Hole...
Authored by: Anonymous on Thursday, January 10 2008 @ 02:59 PM EST
I'm sorry, this particular item reminded me of something from Lois McMaster
Bujold, about a place known as "Jackson's Whole" where *anything* can
be bought or sold.

Otherwise, the "Hole" part might be a down-payment on getting a new
Caldera dug...

[ Reply to This | # ]

SCO needs offices? Hahaha
Authored by: Anonymous on Thursday, January 10 2008 @ 08:05 PM EST
SCO needs offices? Hahaha

What are Novell's lawyers doing in order to earn their fee? Just following an
oft repeated script? Is that what lawyering is all about - "template
law?"

In Canada 50% of managers and professionals work at home!! And it's likely the
same in the USA. Anyone with half a brain knows that when one is in
"bankruptcy" one looks at cutting expenses drastically .... and I mean
drastically. Offices are a 1857 notion; this 2008! Geeeez! Dumb & Dummer!

And hiring people at $300 an hour or more to do internet research! hahahaha
Excuse me while I wipe the tears from my eyes. Outsourcing is the business
standard for this planet. Novell doesn't know this?! Geez.

A V.A. can be hired in India to do expert research on the internet at $4.00 hour
... yes $4.00 per hour! And Novell's lawyers are being paid as well? Novell is
not just being screwed by SCO layers.

hahaha The blind leading the blind.



<a
href="http://www.statcan.ca/english/freepub/71-222-XIE/2004000/chart-l68-bi
g.htm

">ClickyDiDoo</a>

[ Reply to This | # ]

Hustlers...
Authored by: Anonymous on Saturday, January 12 2008 @ 11:49 PM EST
"Not calling anyone a hustler, you understand."

Of course not, PJ. Of course not. Heaven forbid. ;-)

[ Reply to This | # ]

A suggestion for a future article
Authored by: Anonymous on Sunday, January 13 2008 @ 08:12 PM EST

for PJ (or some other enterprising lawyer/para with time on his/her hands) to
write:

What *is* the law exactly, when dealing with a) bankruptcy filings that are in
bad faith, b) debtors who are trying to drain the assets of the estate or
otherwise prejudice a creditor, or c) other abuses of bankruptcy?

What would it take to force an early chapter 7? Or to evict SCO management from
the role of debtor-in-possession? I'm sure there are interesting cases
(especially those involving businesses) on the books that are at least somewhat
similar.

Since IANAL (or a para), I'd have no idea where to begin. :(

[ Reply to This | # ]
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