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SCO's Latest Monthly Operating Reports, for March - Where Did All the Money Go? - Updated 2Xs
Tuesday, April 22 2008 @ 10:02 AM EDT

SCO has filed its monthly operating reports for SCO Group and SCO Operations for the month of March, and it looks like SCO Group has achieved its goal of having no money left for Novell, although it's hard to tell, since the document for Group is almost blank.

I totally know nothing about accounting, so I'll just list what I notice, and you can figure out what it means. I see a net loss on page 5 of $59,811 for "China Investment Income". That is the "Net Profit/Loss". Then on page 7, we learn that SCO China, which didn't always exist, now has a "book value" of $488,544 and SCO Japan $765,366. Germany has $24,944; Canada $38,031 and UK and France have $43 and $70 respectively. A book value of $43? But the Mother Ship?

Page 6 lists $1,317,018 as "Total Assets" in the "Other" category. The rest is blank. No cash. No restricted cash. Just blanks. Then under the category of "Liabilities Subject to Compromise (prepetition)" SCO lists unsecured debt in the amount of $1,745,258. Then "Retained Earnings - Prepetition" is (352,922); "Retained Earnings - Postpetion" is (75,318); "Net Owner Equity" (428,240); for a "Total Liabilities and Owners' Equity" of $1,317,018.

So where's the rest of the money? SCO Operations lists $4,410,536 in cash at the end of the month of March; restricted cash for "Novell SVRx" of $386,163. I gather that may be their highest projected offer, they hope. Page 7 begins the very long list of professionals who got paid. A lot. And on page 9, we see a "Net Loss" of $966,820. And on page 11, SCO operations lists its total assets at $13,016,547, counting everything, office equipment, professional retainers, and the lot. Intercompany Receivables on page 12 are $1,745,258 from SCO Group and $369,259 from SCO Japan. So... wait. You don't suppose they intend to argue that SCO Group is who is being sued by Novell, not SCO Operations? Or is this just reflective of the reorganization, and only SCO Operations is intended to survive? I confess, I have no idea. SCO Operations lists a total for Postpetition Debts at $5,603,339, on page 13, by the way. I guess Novell can gnaw on some bones, but IBM? What is IBM supposed to get for all that litigation annoyance and badmouthing in the media?

I don't understand something else. On page three at the bottom, after listing $2,174,884 in "Total Disbursements", under the final heading it lists $4,410,536 as "Total Disbursements for Calculating U.S. Trustee Quarterly Fees." Those of you who are accountants or lawyers probably understand that, but I don't.

Then on page 9, there is footnote 2, under "Operating Expense" after "Other". It's a blank line for March, but it was (1,859,392) under "Cumulative Filing to Date". Footnote 2 reads, "Adjustment to allocate legal expenses surrounding the IBM and Novell litigation to Cost of Goods Sold at Fiscal Quarter Closes (October, January, April & July). I just have never understood SCO math. Hopefully you guys will.

Here are the filings:

448 - Filed & Entered: 04/21/2008
Affidavit/Declaration of Service
Docket Text: Affidavit/Declaration of Service of Epiq Bankruptcy Solutions, LLC (related document(s)[438] ) Filed by The SCO Group, Inc.. (Werkheiser, Rachel)

449 Filed & Entered: 04/21/2008
Operating Report
Docket Text: Debtor-In-Possession Monthly Operating Report for Filing Period as of 3/31/08 for The SCO Group, Inc. for March 2008 Filed by The SCO Group, Inc.. (Attachments: # (1) Certificate of Service and Service List) (Werkheiser, Rachel)

450 - Filed & Entered: 04/21/2008
Operating Report
Docket Text: Debtor-In-Possession Monthly Operating Report for Filing Period as of 3/31/08 for SCO Operations, Inc. for March 2008 Filed by The SCO Group, Inc.. (Attachments: # (1) Certificate of Service and Service List) (Werkheise

If you'd like to compare February's monthlies, here is SCO Group and SCO Operations [PDFs]. I see on SCO Group's February Operating Expenses that the blanks are there also, so it may be normal SCO. The China Investment Income Loss for February was ($4,140). That's on page 5. Total assets on page 6 are listed as $1,310,790. But that's because they didn't list anything for office equipment and such. Net Owner Equity is ($434,463). Then if you go to page 11, you get the itemization, and the total assets there, including office furniture, is $13,573,085.

Update: We've had a lot of helpful comments explaining basic accounting principles, which I found helpful. Artiken gives an overview here, for example. And randall provides a link to the GnuCash Tutorial. The consensus seems to be that there is no way to get a true picture from the snapshot this monthly provides. But Artiken points out some odd items that may or may not be issues, subject to looking at the books themselves:

Dividends declared - 2,399,095, My guess is that this is saying that SCO is going to pay out 2.4million in dividends. Now the money is just promised. If it was actually paid out in cash, the Asset:Cash account would be credited (lowering Assets) and the OE:JohnDoe account would be debited (lowering Owners Equity). Since this amount is still on the books it means the company still has the money, but it is promised (credited to OE) to the owners. OK that is strange. What company pays dividends when they operate at a net loss?

Treasury Stock - (2,445,757), Ok a negative number which means that they sold some treasury stocks. hmmm. Owner Equity? How? Stocks bought from the US Treasury would normally be an Asset not OE. Unless the stocks are SCO stocks, then It means that SCO bought back some stocks, Assets:Cash going out, OE:Stocks coming in and lowering the amount that SCO owes to an Owner. I'm confused. But looks strange to me since SCO is in Chapter 11.

If OE:Treasury Stock and OE:Dividends declared are a related transaction. It would mean that the company lowered its level of stocks owed and raised the amount of dividends. In other words by moving the numbers in the OE accounts from one account to another they shifted from stocks (bought and thus lowered the amount payable/due upon cash-in) and raised the amount due in dividends. Ah traded stocks for dividends. Chapter 11 or 7. Stock holders. ha ha neener, neener. sorry sucker. Stocks worth Zero. Dividends are payable as a debt. Last in line. But still payable. Since it didn't effect the Cash or bank accounts it wouldn't effect the Assets account or the Liabilities account. So it wouldn't show up under Prof&Loss or A&L reports.

Except the two numbers are not the same. So The transactions do effect an Asset or Liabilities accounts.

And NibbleAbit notices the following:

First, I am not an acountant, but I have been designing accounting systems for over a decade. Second, I am way too busy to go over these numbers in any detail, and I'm sure others have pointed out some of my observations (I haven't read all the posts). If they owed me money, I would want to know more details about the following items:
* funding to subsidiaries.

* Employee benifits ($220K sounds high, how many employees do they have left?, it looks 25% of compensation is in benifits)

* What are the details of the intercompany transfers?

* Their accounts payable look to be going up pretty fast. Not unusual in a bankrupcy i guess, as long as they are legitimate entries.

* I would want to know why they think they have 2 million in goodwill.

* The adjustments to owners equity look interesting. At least needing an explanation.


  


SCO's Latest Monthly Operating Reports, for March - Where Did All the Money Go? - Updated 2Xs | 287 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections Thread
Authored by: hardmath on Tuesday, April 22 2008 @ 10:51 AM EDT

Best to use the subject to indicate the correction, clarified as necessary in
the comment body.

--hm

---
"It's a Unix license... it's a Linux license... a Unix license... a Linux
license" Chinatown IV: The Two SCO's

[ Reply to This | # ]

Off Topic
Authored by: hardmath on Tuesday, April 22 2008 @ 10:53 AM EDT
Clickies, if you please, using the HTML posting hints outlined in Red...

regards, hm


---
"It's a Unix license... it's a Linux license... a Unix license... a Linux
license" Chinatown IV: The Two SCO's

[ Reply to This | # ]

News Pick Discussion
Authored by: hardmath on Tuesday, April 22 2008 @ 10:55 AM EDT

You never know what you'll learn about at Groklaw!

--hm


---
"It's a Unix license... it's a Linux license... a Unix license... a Linux
license" Chinatown IV: The Two SCO's

[ Reply to This | # ]

SCO's Latest Monthly Operating Reports, for March - Where Did All the Money Go?
Authored by: Anonymous on Tuesday, April 22 2008 @ 11:03 AM EDT
Ummm. I seem to recall from my Accounting 101 class that, on a balance sheet,
assets are supposed to equal liabilities. That's what the word
"balance" means, I think.

[ Reply to This | # ]

SCO's Latest Monthly Operating Reports, for March - Where Did All the Money Go?
Authored by: Anonymous on Tuesday, April 22 2008 @ 11:06 AM EDT
Isn't it normal for assets to equal liabilities? Isn't that just how
double-entry book-keeping works?

[ Reply to This | # ]

Accounting HAS to Balance, Doesnt it?
Authored by: Anonymous on Tuesday, April 22 2008 @ 11:07 AM EDT
Its been a while since accounting 101 but dont the balance sheets HAVE to
balance in normal accounting?

Is this different?

Perhaps I fail to understand the significance of perfect balance between assets
and liabilities because i thought that ws intended in the "balance
sheet". The balance aspect of it, even.

In normal corporate accounting, whatever isnt taken up by "true"
liabilities, you add an entry for "shareholder equity" or
"partnership equity" based on the type of company and that is the
unencumbered assets that the company holds...

[ Reply to This | # ]

SCO's Latest Monthly Operating Reports, for March - Where Did All the Money Go?
Authored by: itsnotme on Tuesday, April 22 2008 @ 11:08 AM EDT
They're still operating under the bankruptcy court so that means they still had
to get permission to spend what they spent. Even distributing money to it's
subsidiaries has to be approved by the court, so Novell could probably request
the court to tell them off and have them disgorge the money if that was indeed
what happened.

If they did decide to play funny, I doubt the court is going to look upon that
as a favorable move for the shareholders. Time to call in the big boys to run
the company and kick out the current people.

[ Reply to This | # ]

SCO's Latest Monthly Operating Reports, for March - Where Did All the Money Go?
Authored by: Anonymous on Tuesday, April 22 2008 @ 11:09 AM EDT
I love the bit about not placing "undue reliance" on the monthly
operating report and that the results may not be "complete".

[ Reply to This | # ]

What IBM might want
Authored by: Anonymous on Tuesday, April 22 2008 @ 11:19 AM EDT
What is IBM supposed to get for all that litigation annoyance and badmouthing in the media?
I guess for IBM it is mostly about legal certainty and maybe deterrence against further nuisance lawsuits. That a small company like SCO might not be able to pay all damages from the counterclaims was to be expected. So I think IBM is after one or more of the following:
-A court verdict (or settlement) that says IBM never violated SCO's rights
-SCO's bankruptcy to deter others
-maybe SCO's IP bought cheaply from the bankruptcy assets (but NOT as a payoff to make SCO happy).

[ Reply to This | # ]

This Isn't Over. Not Yet.
Authored by: Anonymous on Tuesday, April 22 2008 @ 11:22 AM EDT
Hey, everybody!

What is IBM supposed to do?

I have that same feeling I get playing cards -- opponents keep their cards close
to their vests. I use the sociability as a guage of what they hold. Chatty,
friendly equals casual. When they get eerily quiet, that's a very bad sign.
There's dramatic tension, they anticipate making a major move. And you can tell
the difference between "I'm getting desperate" and "I got this
wired."

I have a bad feeling about this. IBM has something up its sleeve, and that's
why they've been content to let this whole thing play out like this. SCO spread
itself too thin, IBM could easily have hit them on a variety of fronts, like
working with Red Hat to restart its case.

I can't tell you exactly how, but I think this is far worse for SCO than any of
us are seeing right now.

Dobre utka,
The Blue Sky Ranger

[ Reply to This | # ]

SCO's Latest Monthly Operating Reports, for March - Where Did All the Money Go?
Authored by: Anonymous on Tuesday, April 22 2008 @ 11:25 AM EDT
Where did the money go? Really: Why does SCOG have zero and the subsidiaries
have something?

I'd guess it is to thwart the SCO/Novel and SCO/IBM suits. In a scenario I can
envision, IBM and Novel get nothing from SCO itself. SCO disappears from the
face of the earth. At the same time, the subsidiaries somehow stay in business
doing something, maybe consulting.

The ugly part is: the subsidiaries can harrass IBM and Novel by continuing with
the FUD over intellectual property with the intent to slow Linux adoption.

Disclaimers: IANAL. I don't know squat about accounting either. Any of the above
is just me speculating about WTF is going on. In other words: I don't know
squat.

[ Reply to This | # ]

Novell
Authored by: Anonymous on Tuesday, April 22 2008 @ 11:26 AM EDT
"Restricted cash for "Novell SVRx" of $386,163. I gather that is their highest projected offer, they hope." Might this just be the "passthrough" stream from the existing (and uncontested) SVRx licenses (other than Sun and Microsoft)? AFAIK, SCO's still collecting those revenues, and it would be recklessly irresponsible for them to commingle those funds with cash on hand (irony!)

[ Reply to This | # ]

Errors and assumption- GL needs an accountant advisory
Authored by: Anonymous on Tuesday, April 22 2008 @ 11:54 AM EDT
Clearly, the financial commentary can be improved, as the balancing balance sheet is a fundamental accounting concept. There are quite a few folks that follow SCOXQ.pk who could be consulted and help deconstruct the balance sheet. An ad hoc review using these resources would be appropriate. PJ has their email.

I would like to draw attention to the AR billing.

Monthly Billing
Septe..... $595,425
Octob... $1,914,675
Novem... $1,466,310
Decem... $1,549,595
Janua... $1,986,046
Febru... $1,221,167
March..... $215,646
Total... $8,948,864
The March drop in AR billing is curious, as the acrual revenue line does not show the same collapse. January and February sales were billed prior to March, and very little billing occured in that month. Booked March sales indicate that the AR billing should recover in April? The uneveness in billing not explained however.
Monthly Acrural Revenue
Septe..... $692,834
Octob... $1,728,761
Novem... $1,244,504
Decem... $1,324,749
Janua... $1,375,025
Febru... $1,058,206
March... $1,816,052

Total... $9,240,131
The Monthly AR collections are likely corrupt data, as the months of November, December and January show exactly identical value for the cash collected. These numbers are from the revised amended operating reports, perhaps a set of second amended reports will be necessary.
Monthly collections
Septemb..... $697,688
October... $1,812,915
November.. $1,326,474
December.. $1,326,474
January... $1,326,474

February.. $1,410,450
March..... $1,067,293
Total..... $8,967,768

[ Reply to This | # ]

SCO's Latest Monthly Operating Reports, for March - Where Did All the Money Go?
Authored by: Anonymous on Tuesday, April 22 2008 @ 12:53 PM EDT
If I was a judge, I would be very angry.

Can the directors of a company be sanctioned? Surely post-Enron, it must be
possible.

JeffV

[ Reply to This | # ]

MeInc/China
Authored by: Anonymous on Tuesday, April 22 2008 @ 01:34 PM EDT
Where did the China subsidiary come from? There were notes in one of the lawyers
applications for payments about creating a corporation in Hong Kong. I don't
believe SCO should be doing that while in BK.

MeInc again there were notes in an application for payment about employees
leaving MeInc. Darl said MeInc was an empty shell. Again I don't think SCO
should have moves assets/employees into a subsiduary while in BK.

This is large speculation due to the information barrier present but the SCO
Group and its Yarro Canopy Group roots were very fond of the corporate shell
game. That is one game that can you into big trouble while in BK protection.

It will be interesting to find out what is really going on here.

[ Reply to This | # ]

It is called scorched earth tactic
Authored by: Anonymous on Tuesday, April 22 2008 @ 01:57 PM EDT
Every army who is about to lose, and is afraid to surrender does it. They burn
down farms and destroy any infrastructure or other things that can be of value
to the advancing host.

SCO is like a sore loser who upon finding out he is losing the house to the
other party in divorce court decides to torch it.

This kind of activity when done by civilians is considered a felony. But when
done by limited liability companies, all is fair that can be snuck past the
bankrupcy court.

[ Reply to This | # ]

Restricted cash for "Novell SVRx"
Authored by: rsteinmetz70112 on Tuesday, April 22 2008 @ 02:21 PM EDT
I'd suggest that this is the SVRx royalties that SCO has collected and promised
the Bankruptcy Court that they would hand over to Novell under their existing
agreements.

---
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

[ Reply to This | # ]

Owner's Equity is difference between Assets and Liabilities
Authored by: kawabago on Tuesday, April 22 2008 @ 02:33 PM EDT
The Owners Equity is a Liability Account that contains the difference between
the Total Assets and Liabilities. It is in essence what the company is worth on
paper.

[ Reply to This | # ]

Who owns who?
Authored by: Anonymous on Tuesday, April 22 2008 @ 02:51 PM EDT
My understanding was that Operations was wholly owned by Group. If that's the
case, then why isn't Operations included as an asset of Group (in the way the
foreign subs are)?

It seems that Group's only assets are the subsidiaries (the "Other
assets" section is described lower down, and just includes the subs - the
numbers add up), which means all the other assets are officially held by
Operations, but if Operations is wholly owned by Group, they should still appear
somewhere on Group's balance sheet.

These filings seem very odd to me...

[ Reply to This | # ]

There was still cash at the end of March
Authored by: bezz on Tuesday, April 22 2008 @ 03:07 PM EDT
March was less interesting and expensive than I expected.

See page 11 of filing 450 (SCO Operations). There was about %2.175 million of
unrestricted cash -- restricted cash is cash that is already committed to other
uses. On page 3, they actually came up $87,000 ahead, but that includes what
appears to be unpaid Novell SVRx royalties of $386,163.

There isn't much new in this filing, other than coming out ahead on paper for a
month. Payroll taxes are still excessive compared to total payroll and funding
subsidiaries is still very high. Professional fees were lower than I expected
considering all of the SNCP work before April, but maybe they had wrapped up
most of the deal before March. That is odd, though, because they filed an
incomplete plan and were supposed to be working on completing it before the
April hearing. But with SCO, it is all smoke and mirrors.

April's report should be interesting. I see no way they can avoid spending a
lot of money this month. Even with BSF lawyer's fees capped, there will still
be trial expenses. And they are working on another SNCP deal which won't be
acceptable as a modification of the initial one and will likely require starting
from scratch.

[ Reply to This | # ]

I still say ...
Authored by: DodgeRules on Tuesday, April 22 2008 @ 04:44 PM EDT
... that SCO will avoid the trial this month somehow, someway. Chapter 7? Dog
ate my subpoena? Darl skipped town with the company assets and they are broke?
(He went to McDonalds to buy the Board of Directors lunch and didn't return with
the $1.20 change.) It could even be that they decide to go ahead with the trial
but will file for Chapter 7 minutes before a ruling is handed down against them.

[ Reply to This | # ]

Disgorgement: easy or hard
Authored by: Anonymous on Tuesday, April 22 2008 @ 05:09 PM EDT
Easy: Novell tells Morrison & Foerster they want to get some money back.
Some money gets recovered.

Hard: Novell gives MoFo a 90% commission on recovered funds. Companies paid by
SCO start sending back the money with interest and chocolate.

[ Reply to This | # ]

Total Disbursements for Calculating U.S. Trustee Quarterly Fees.
Authored by: Anonymous on Tuesday, April 22 2008 @ 06:00 PM EDT
In Chapter 11 bankruptcy, debtors are required to pay a quarterly fee to the United States Trustee Program for the bankruptcy protection they get from creditors. The amount that is charged is based on the total disbursements the debtor makes. Disbursements include all pre- and post-confirmation payments made by or on behalf of the debtor, including routine operating expenses. To get out of Chapter 11, you must file all disbursments and pay all fees (and any interest for late payment).

So essentially, the more money the estate spends, either paying back creditors or just paying operating expenses, the bigger the quarterly fees will be. Fees start at $350 a quarter, but can go up to $30,000.

[ Reply to This | # ]

Let the disgorgement commence! n/t
Authored by: Anonymous on Wednesday, April 23 2008 @ 12:16 AM EDT
--Alma

[ Reply to This | # ]

It's time for IBM to sue McBride & company personally
Authored by: Anonymous on Wednesday, April 23 2008 @ 02:45 AM EDT
That's where some of the money went. They were personally responsible for the
frivolous, abusive lawsuits -- they should pay up to IBM. Corporations are not
an excuse for defrauding the court.

[ Reply to This | # ]

Treasury Stock
Authored by: Anonymous on Wednesday, April 23 2008 @ 07:46 AM EDT

In the US this term does not refer to stock bought from the US Treasury, it is shares in the issuing company (SCO) repurchased by the issuing company on the open market.

Usually this is done to increase per share equity by reducing the number of outstanding shares. Repurchased shares can be cancelled, or held for possible resale; held shares are accounted as "treasury stock".

[ Reply to This | # ]

Scratch My Back - I'll scratch yours - ndb
Authored by: Anonymous on Wednesday, April 23 2008 @ 08:20 AM EDT
What lawyer would not accept a huge contract with a 10% 'commission' kickback to
the contracting party or to a contractual 'partner'?

Why not pay high dividends to shareholders when the rat pack includes the
biggest shareholders (and the biggest rats)?

In other words, gutting the company in an organized way can be quite profitable
for parties included in the rape. What's not to understand?

Ya think Sarbanes/Oxley is going to catch this miscarriage of justice?

Ya think the SEC is gonna notice that when the ship went down the lawyers were
part of the scavengers? Hey, it's just business as usual; you know, worst case
senario - we gut the company. Best case senario - we win the lawsuit and 5
billion dollars (5000 million) (5GB - gigabucks!) And with a little help from
our friends, TGBSC (The Guys who Bought Source Code), we had some millions to
play with.

with love and respect,
ndb

[ Reply to This | # ]

Some observations
Authored by: NibbleAbit on Wednesday, April 23 2008 @ 09:07 AM EDT
First, I am not an acountant, but I have been designing accounting systems for over a decade. Second, I am way too busy to go over these numbers in any detail, and I'm sure others have pointed out some of my observations (I haven't read all the posts). If they owed me money, I would want to know more details about the following items:
  • funding to subsidiaries.
  • Employee benifits ($220K sounds high, how many employees do they have left?, it looks 25% of compensation is in benifits)
  • What are the details of the intercompany transfers?
  • Their accounts payable look to be going up pretty fast. Not unusual in a bankrupcy i guess, as long as they are legitimate entries.
  • I would want to know why they think they have 2 million in goodwill.
  • The adjustments to owners equity look interesting. At least needing an explaination.

[ Reply to This | # ]

Where's SCO's trial brief?
Authored by: Anonymous on Wednesday, April 23 2008 @ 11:16 AM EDT

Today, April 23, is the day that SCO must file their trial brief for next Tuesday's trial.

Has it been filed yet?

[ Reply to This | # ]

SCO's Latest Monthly Operating Reports, for March - Where Did All the Money Go? - Updated 2Xs
Authored by: Cheers on Wednesday, April 23 2008 @ 01:11 PM EDT
Ok, I unfortunately don't have time to go through the whole set of docs, but I
can answer a few of the questions...

Regarding the dividends declared (dividends declared is simply dividends that
have been announced but not yet paid out... there's a whole different lecture
on issuance of dividends, but that's for another time), it is not uncommon for
companies to continue dividends out of retained earnings in a period of
temporary loss assuming the business is a "going concern" (ie destined
to continue indefinitely as a functional business). This may or may not be more
a matter of who's perspective (shareholder, SCO exec, Novell/IBM) that you look
at it from ;)

Artiken, good catch on the treasury->dividends idea... It's an odd system of
transactions... As for that, i would say that it could really only be answered
accurately by a corporate accountant. It is possible that they did a conversion
for consolidation (or more nefarious purposes) and chewed some of the loss in
value as a loss on sale/transfer.

Regarding employee benefits, you're right NibbleAbit... 25% of compensation is
an unbelievable amount of money, especially as an average... To put it into
perspective, 10% is considered a generous amount. 25% is obscene...
considering registered savings plans can be considered a part of benefits
compensation, it's quite an interesting number to investigate further...

Goodwill... hahaha... This is a tough one to analyze, but the most common
methodology i've seen is increasing based on "goodwill gains", and
depreciated over time. For what it's worth, accountants are supposed to be as
conservative as possible with goodwill, especially since it was abused in the
90's and at the turn of the century to inflate book value. Likely, though, the
only way to really figure out this one is to buy their accountant a beer
sometime.

Disclaimer: I am not a practicing accountant and these comments should not be
given professional credence

[ Reply to This | # ]

Book value of $43
Authored by: elderlycynic on Thursday, April 24 2008 @ 03:41 AM EDT
That is a little low, but such things are not unusual. What
it mean is that there is a shell company registered for sales
purposes, and nothing else. Even its telephone number will
be that of a mobile owned by SCO Inc.

If such a shell starts to have a cash flow, then it should be
either obvious (i.e. in = out) or you should smell a rat.

[ Reply to This | # ]

SCO's Latest Monthly Operating Reports, for March - Where Did All the Money Go? - Updated 2Xs
Authored by: Anonymous on Thursday, April 24 2008 @ 09:54 PM EDT

"Their accounts payable look to be going up pretty fast. Not unusual in a bankrupcy i guess, as long as they are legitimate entries."

It is unusual in a bankruptcy case. The Trustee wants the debtor to have a positive cash flow and at least some chance of long-term profitability. Without that, any reorganization plan is doomed to failure.

Creditors want to limit their exposure to companies in Chapter 11. While they may extend some credit, it won't be a lot. When you're in Chapter 11, "net 30 days" means they really do want to be paid within 30 days. Delinquent accounts quickly change your credit rating to "cash only, money up front".

Who is lending them that much, and why is the court and trustee letting it happen?

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