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SCO's "Already Filed" Missing MORs Get Filed in Real Life - Updated 2Xs: June MORs, 2nd Letter & Novell Answer
Monday, August 03 2009 @ 03:54 PM EDT

SCO's missing monthly operating reports for April and May have suddenly shown up, right after the devastating hearing on July 27th where it was pointed out to the judge that not filing necessary reports from March onward was one indication of the need for a neutral to take over management of the company.

IBM's lawyer reportedly argued that SCO should not remain debtors in possession because there was no excuse for not filing any MORs since March, among other reasons, to which SCO's attorney claimed that April and May had already been filed.

It seems not, my dear Watson. The docket says these MORs were filed and entered today, thus by my simple calendar, they were not already filed on July 27.

Here they are:

08/03/2009 - 882 - Debtor-In-Possession Monthly Operating Report for Filing Period April 2009 for The SCO Group, Inc. Filed by The SCO Group, Inc.. (Attachments: # 1 Certificate of Service and Service List) (Makowski, Kathleen) (Entered: 08/03/2009)

08/03/2009 - 883 - Debtor-In-Possession Monthly Operating Report for Filing Period April 2009 for SCO Operations, Inc. Filed by The SCO Group, Inc.. (Attachments: # 1 Certificate of Service and Service List) (Makowski, Kathleen) (Entered: 08/03/2009)

08/03/2009 - 884 - Debtor-In-Possession Monthly Operating Report for Filing Period May 2009 for The SCO Group, Inc. Filed by The SCO Group, Inc.. (Attachments: # 1 Certificate of Service and Service List) (Makowski, Kathleen) (Entered: 08/03/2009)

08/03/2009 - 885 - Debtor-In-Possession Monthly Operating Report for Filing Period May 2009 for SCO Operations, Inc. Filed by The SCO Group, Inc.. (Attachments: # 1 Certificate of Service and Service List) (Makowski, Kathleen) (Entered: 08/03/2009)

Groklaw's nsomos was the first to notice that page 7 of #884 is illegible. That's the page that lists the book value of assets of the subsidiaries on the day SCO filed for bankruptcy in September, 2007, compared to May 31, 2009. But if you zoom in, you can at least make out that the book value of SCO China was nearly a half a million on the day SCO filed, and it's zero now. I guess they'll need to refile a legible copy. April's comparable page 7 on #882 is clearer. On page 4 of #883, I see a notation for April that reads like this:
Other Receipts:
China Investment - Royalty from Japan - 4/1/09-4/30/09: $0 - Cumulative Filing to Date: 802,644
Then on page 3 of #883, it lists under disbursements, $267,075 as "Funding of Subsidiaries". That's April. In May, as you can see on page 3 of #885, the same "Funding of Subsidiaries" was $175,710. The cumulative funding of the subs since SCO filed for bankruptcy is $6,447,113. The cumulative amount spent on salaries, net payroll, is $6,786,402. They could have paid Novell instead, I can't help but reflect. They have spent another $4,870,166 on "Administrative & Selling". Selling what? To whom? And they've spent a cumulative total of $1,513,097 on "Non-Bankruptcy Professional Fees". Maybe you can understand why the creditors are now asking the court to please step in. Cash at the end of May? $2,164,874.

And as long as we're talking about the subsidiaries and SCO's MORs, can anyone explain to me something we've been puzzling over since the February MOR [PDF] was filed?1 Why would Japan, as shown on page 12, be holding the restricted Novell money?

Update: The MORs for June are filed now. And another letter from SCO to the judge:

08/03/2009 - 886 - Debtor-In-Possession Monthly Operating Report for Filing Period June 2009 of The SCO Group, Inc. Filed by The SCO Group, Inc.. (Attachments: # 1 Certificate of Service and Service List) (O'Neill, James) (Entered: 08/03/2009)

08/03/2009 - 887 - Debtor-In-Possession Monthly Operating Report for Filing Period June 2009 of SCO Operations, Inc. Filed by The SCO Group, Inc.. (Attachments: # 1 Certificate of Service and Service List) (O'Neill, James) (Entered: 08/03/2009)

08/03/2009 - 888 - Letter (follow-up) to The Honorable Kevin Gross (related document(s) 879 , 880 ) Filed by The SCO Group, Inc.. (O'Neill, James) (Entered: 08/03/2009)

The letter is a follow-up to IBM's and Novell's points they raised in their letters responding to SCO's letter, all of which you'll find here. SCO draws the judge's attention to pages 51 and 52 of SCO's Response to the three motions to convert filed by IBM, Novell and the U.S. Trustee's Office. I think this is to try to persuade the judge that there is no need for a separate motion to suggest an examiner, because SCO mentioned that as a possibility in its Response. Or so SCO seems to be saying. Here's the exact wording, in case I'm misreading:
As a brief follow-up to IBM's and Novell's points raised last week concerning the basis for an examiner in the absence of a specific motion, the Debtors wanted to direct the Court's attention to pages 51 and 52 of Debtors' Response to those parties' and the U.S. Trustee's Motion to Dismiss or Convert, where an examiner was suggested as one option for the court.
No one suggested an examiner just for an auction, though, with the SCO Board still in control while the examiner just advises, which was SCO's new brainstorm. However, this letter, while fairly subtle, seems to be agreeing to an independent examiner.

SCO's lawyers must be reading some handwriting on the wall. Like mene mene tekel and parsin, which roughly translates to mean: You have been weighed in the balance and found wanting. Your kingdom will be divided and given to others. Joke. But I do read these two letters as indicating real anxiety in the SCO camp, and an effort at damage control.

Update 2: Novell has filed a response already to what it calls SCO's "inappropriate post-trial briefing":

08/03/2009 - 889 - Letter Regarding Post-Trial Filed by Novell, Inc.. (Greecher, Sean) (Entered: 08/03/2009)

A taste:
In any event, whether or not the Debtors properly raised the issue previously, the appointment of an examiner is not, for the reasons Novell, IBM and the United States Trustee have previously discussed, a solution for the problems of these chapter cases.

With that, we hope the post-trial communications with the Court are at an end.

BAM!! What he means by inappropriate is this: normally you can't communicate with a judge any time you feel like it. If, after a hearing or a trial, new information comes to light, then it's appropriate. But if you just think you could do a better job, or the judge said your time was up and meant it, so you didn't get to mention your last two points, you can't just send them in an email later, or a letter, to His Honor. If a missing witness suddenly reappears from a Rip Van Winkle coma or recants utterly what he said at trial, you can surely let him know there are new issues in the matter he might like to know about. But you don't normally get to grab extra time to finish what you didn't get said at the trial.

As for what SCO said on pages 51 and 52, here it is:

Of these two alternatives - trustee or examiner - an examiner would be the Debtors' preferred choice. The examiner's report can inform the Court, the United States trustee and creditors of an unbiased and professional opinion of the value of the Debtors' assets, including SCO's claims against Novell, IBM, AutoZone and UNIX infringers generally. Concomitant with that evaluation, of course, would be an opinion about the strength of the reciprocal claims of IBM, Novell and Red Hat. The examiner could also look into the Debtors' unsuccessful efforts at selling their assets and report on these issues as well.

A Chapter 11 trustee, who like a Chapter 7 trustee, owes fiduciary duties to the shareholders in a solvent case, has the ability to continue the business without fear of running a deficit in the Chapter 7 estate. This trustee would be able to take the time necessary to do the evaluations that an examiner would do. But the trustee option would be more expensive. First, the trustee would receive a commission based on 11 U.S.C. 326(a) as opposed to the hourly fee or flat fee charged by an examiner. Second, notwithstanding the commission, the trustee might opt to retain professionals who would then charge an hourly fee on top of the trustee's commission. By the time the trustee and his or her professionals have completed their evaluations, the Tenth Circuit would likely have already ruled. That fact itself would go a long way in resolving most doubts about the future of the Debtors, and render the report, be it from an examiner or a Chapter 11 trustee somewhat anticlimactic.

Accordingly, in order of preference, it is the Debtors' view that if cause is established and the Court is moved to take some action, that the Court consider either dismissing the cases or appointing an examiner, as either alternative would be far preferable to conversion of the cases to Chapter 7. And, if the Court believes that a trustee is required, then a Chapter 11 trustee, who will likely continue to operate the business for the benefit of all constituents of the estates, would clearly be the better option.

Now, in contrast, here's what SCO asked for in the first letter it sent to the judge:
The Debtors have now had a chance to consult with their board of directors and wanted to inform the Court that the Debtors would consent to an auction of the subject assets (i.e., those offered for sale in the current motion), and the appointment of an examiner to oversee the sale should the Court so direct. The Debtors agree to the involvement of an examiner under 11 U.S.C. 1104 to advise the Debtors' board and to report to the Court on the sale process and the outcome of any auction. The appointment of an examiner should alleviate the concerns expressed at the hearing that a third party would need to be involved in the process to make sure it is fair to all bidders.
Does that look identical to you? No? Me either.

Here's SCO's letter, as text, followed by Novell's:

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

[Pachulski Stang Letterhead]

[contact information]

August 3, 2009

The Honorable Kevin Gross
United States Bankruptcy Court
District of Delaware
[address]

Re: The SCO Group, Inc., et al.
Chapter 11 Case No. 07-11337 (KG)

Dear Judge Gross:

As a brief follow-up to IBM's and Novell's points raised last week concerning the basis for an examiner in the absence of a specific motion, the Debtors wanted to direct the Court's attention to pages 51 and 52 of Debtors' Response to those parties' and the U.S. Trustee's Motion to Dismiss or Convert, where an examiner was suggested as an option for the court. An examiner was also discussed during the July 27th hearing as a potential alternative to a chapter 11 trustee. The Debtors contended at the hearing that a trustee is unwarranted. On the other hand, we think an examiner would meet the objectives of all constituents of these cases, if the Court decrees an auction with third-party involvement.

The Debtors also believe that the Court has the inherent power under Section 105 of the Bankruptcy Code to appoint an examiner if independent third-party oversight is deemed warranted under the circumstances. Our suggestion of an examiner was prompted by IBM's and Novell's assertion that the Debtors could not assess objectively a competing bid submitted by LNS Acquisition. We disagree with that proposition and suggest that the auction process and stalking horse protections provided for in the unXis contract would effectively serve all interests with verifiable integrity. Nevertheless, an independent examiner would allay any concerns on this point and Debtors support this approach for assured objectivity and transparency.


[Pachulski Stang Letterhead]

The Hon. Kevin Gross
August 3, 2009
Page 2

The Debtors are available to address this issue with the Court or provide any additional information which maybe helpful to the Court.

Respectfully,

[signature]
James E. O'Neill

cc: William K. Harrington, Esquire (via email)
Joseph J. McMahon, Jr., Esquire (via email)
Adam A. Lewis, Esquire (via email)
Richard Levin, Esquire (via email)
Ryan E. Tibbitts, Esquire (via email)
Arthur J. Spector, Esquire (via email)

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

[Morrison & Foerster Letterhead]
[contact information]

August 3, 2009

Honorable Kevin Gross
United States Bankruptcy Court
District of Delaware
[address]

Re: In re SCO Group, Inc. et al.
United States Bankruptcy Court
District of Delaware
Case No. 07-11337 (KG)

Dear Judge Gross:

We write in response to the Debtors' further letter of today regarding the issues raised and submitted to the Court by the parties after briefing, trial and argument on July 27, 2009.

Our first comment is that this second letter, along with the Debtors' letter of last Friday, is, we believe, inappropriate post-trial briefing, for which neither the Court nor the parties asked at the conclusion of trial on July 27. We believe that the record was closed then and should not be, in essence, re-opened a week later for afterthoughts by the Debtors, especially on an issue for which the Debtors had ample opportunity to present their position both in the weeks leading up to the trial, during the trial and upon final argument at the close of trial.

In any event, whether or not the Debtors properly raised the issue previously, the appointment of an examiner is not, for the reasons Novell, IBM and the United States Trustee have previously discussed, a solution for the problems of these chapter cases.


Morrison | Foerster

Honorable Kevin Gross
August 3, 2009
Page Two

With that, we hope the post-trial communications with the Court are at an end.

Sincerely,

[signature]
Adam A. Lewis

cc: William K. Harrington, Esq. (via email)
Richard Levin, Esq. (via email)
Joseph J. McMahon, Jr., Esq. (via email)
Arthur J. Spector, Esq. (via email)
Ryan E. Tibbitts, Esq. (via email)


1PJ: We've been trying to figure out the China syndrome since February's MOR too. Here's what we noticed back then:

SCO Group's MOR for February [PDF] lists a book value for SCO China as of February 28, 2009 at zero. That's on page 7 of the PDF. It was valued at $497,858 as of September 2007, when SCO filed for bankruptcy protection.

Please compare SCO's MOR for October 2007 [PDF]. On page 7 of the former, it lists the book value of SCO China at $497,051. A year ago, the book value was $482,355 [PDF]. But last month, it was zero [PDF] and this month it is zero. Every other subsidiary's book value is the same. So when did China go poof?

If you look at SCO Group's MOR for December 2008 [PDF], it lists SCO China's book value in such a smudged way, it's impossible to be certain of the figure. But if you work backward from the total, no math I can come up with computes, unless SCO China's book value is a negative number. If we assume the first figure, for SCO Germany, is identical to every other MOR listing, then it's $24,944. SCO Japan is $765,366, SCO Canada is $38,051, SCO France is $70 and SCO UK is $4. On my calculator that adds up to $828,435. The total listed on the MOR in that category is $823,406, as best I can make out. So that means that the figure for SCO China must be a minus, and the smudged figure must be (5,029).

The month before, the MOR for November of 2008 [PDF], the figure for China is $364,971. And on page 4 of SCO Operations' MOR for November [PDF], it lists China Investment at 316,906 and a cumulative figure to date of 432,659.65. And the book value now is zero? Did they sell it off? Are they pouring money down a volcano in China? What? If they sold it, wouldn't it show up somewhere?

The SCO Operations MOR for that same time period [PDF], December 2008, mentions on page 4 under "Other Receipts" an item, "China Investment, Royalty from Japan", $369,984. And on page 14, I see under the category, Breakdown of "Other" Category, it lists "Miscellaneous Exp/Inc (SCO Japan Interco Reclass Req'd) at (619) and (823,067) under Cumulative Filing to Date. Then on page 16 SCO Japan is listed in the category "Other Current Assets" as "Intercompany Receivables - SCO Japan" 297,932. And under "Other Assets" there's 2,203 for "Investment in Affiliates."

Then on that same page 16, under "Liabilities and Owner Equity" I see "Intercompany Payables", to UK 187,351; to Germany 212,772, to France 28,987; to Canada 11,446; and to SCO India 434,226.

Can any of you brainiacs tell me what, if anything, this means?

Here are the filings:

04/06/2009 735 Affidavit/Declaration of Service of Epiq Bankruptcy Solutions Regarding Supplemental Order Granting and Sustaining Debtors' First (Non-Substantive) Omnibus Objection to Claims Pursuant to 11 U.S.C. Section (502(b) and Bankruptcy Rule 3007 (related document(s) 730 ) Filed by The SCO Group, Inc.. (O'Neill, James) (Entered: 04/06/2009)

04/07/2009 736 Debtor-In-Possession Monthly Operating Report for Filing Period February 2009 of The SCO Group, Inc. Filed by The SCO Group, Inc.. (Attachments: # 1 Affidavit of Service and Service List) (Makowski, Kathleen) (Entered: 04/07/2009)

04/07/2009 737 Debtor-In-Possession Monthly Operating Report for Filing Period February 2009 of SCO Operations, Inc. Filed by The SCO Group, Inc.. (Attachments: # 1 Affidavit of Service and Service List) (Makowski, Kathleen) (Entered: 04/07/2009)

There is a footnote on page 3 of #737 that reads: (1) The initial MOR incorrectly consolidated cash balances from subsidiaries. This amount reflects cash only held in SCO Operation, Inc. bank accounts.

And it seems easier to understand the MORs if you compare them to the SEC filings. What we remember is that China appeared to be carried on the books as an investment because they held an equity stake (30% of the whole company). They converted that investment to cash, perhaps, kind of like how you convert an illiquid savings bond to cash when you need the money. Is that the explanation? They did not sell anything, they just converted equity (stock) to cash? But where is it? Shouldn't there be a corresponding entry somewhere? Well, this 10K says: "On November 24, 2008, the Company entered into a Dissolution Agreement and Termination Agreement to dissolve its minority ownership in a Chinese company. Under the Agreement, the Company received a dissolution payment of $370,000 in December 2008. Upon completion of the dissolution of the Chinese company, the majority shareholder in the Chinese company will enter into a distribution agreement with the Company."


  


SCO's "Already Filed" Missing MORs Get Filed in Real Life - Updated 2Xs: June MORs, 2nd Letter & Novell Answer | 593 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections here
Authored by: red floyd on Monday, August 03 2009 @ 04:01 PM EDT
In the unlikely event that PJ made an error.

Please indicate the correction in your post title.

---
I am not merely a "consumer" or a "taxpayer". I am a *CITIZEN* of the United
States of America.

[ Reply to This | # ]

Off Topic Here
Authored by: red floyd on Monday, August 03 2009 @ 04:02 PM EDT
On-topic posters will be forced to file SCOXQ's June MORs.

---
I am not merely a "consumer" or a "taxpayer". I am a *CITIZEN* of the United
States of America.

[ Reply to This | # ]

[NP] News Picks Discussion
Authored by: Aladdin Sane on Monday, August 03 2009 @ 04:02 PM EDT
You can discuss Groklaw News Picks here. Do mention which News Pick you are commenting on.

---
For a successful technology, reality must take precedence over public relations, for nature cannot be fooled. --Richard Feynman

[ Reply to This | # ]

Filed "just in time" to be too late for the judge to use
Authored by: Anonymous on Monday, August 03 2009 @ 04:03 PM EDT
The judge must have already written his ruling on conversion to chapter 7.

[ Reply to This | # ]

Is there a penalty?
Authored by: red floyd on Monday, August 03 2009 @ 04:04 PM EDT
For such an out-and-out lie to the Court?

Not that I expect any such thing to land on SCOXQ's attorneys.

---
I am not merely a "consumer" or a "taxpayer". I am a *CITIZEN* of the United
States of America.

[ Reply to This | # ]

SCO's "Already Filed" Missing MORs Get Filed in Real Life
Authored by: Anonymous on Monday, August 03 2009 @ 04:05 PM EDT
Yet another lie! Perhaps there should be a "timeline" on Groklaw for
SCO fibs and tales!

[ Reply to This | # ]

June MOR was due July 20th
Authored by: Anonymous on Monday, August 03 2009 @ 04:06 PM EDT
So SCO is still non-compliant.
Just a little bit less so.

[ Reply to This | # ]

Analysis - to April 30th period
Authored by: Anonymous on Monday, August 03 2009 @ 04:11 PM EDT
The reports say that they are prepared on an accrual basis, but they would have
us believe that there were no operating expenses in April.

No stationary. No rents or leases. No salaries, commissions or fees. No
insurance. No advertising.

This is for SCO Group. I suppose it's possible that all operating expenses go
through a subsidiary.

[ Reply to This | # ]

April and May are the same?
Authored by: Anonymous on Monday, August 03 2009 @ 04:12 PM EDT
Is it me or is the May MOR an exact copy of the April one?

[ Reply to This | # ]

Are they fraudulent?
Authored by: Anonymous on Monday, August 03 2009 @ 04:12 PM EDT

Would you bet the farm that they would survive a neutral audit?

[ Reply to This | # ]

duplicate filings?
Authored by: designerfx on Monday, August 03 2009 @ 04:14 PM EDT
whats up with that? did I miss something?

[ Reply to This | # ]

Filed only because the dog that ate them upchucked
Authored by: Anonymous on Monday, August 03 2009 @ 04:25 PM EDT

Told you last week there would be more filings the following Monday. And the day
isn't over yet. Just wait for tomorrow's filings. I'm running out of popcorn.

[ Reply to This | # ]

SCOGBK-884.pdf page 7 conveniently illegible
Authored by: nsomos on Monday, August 03 2009 @ 04:28 PM EDT
Page 7 of 9 for SCOGBK-884.pdf happens to have
most of its figures conveniently illegible.

This page has figures for SCO Germany, Japan, Canada, France,
UK, and China.

While if it were anyone else, I would say they deserve
the benefit of doubt, after what SCOG has put us all through,
I would not be least bit surprised if this was intentional.

I was looking if there were any way to track the payments
from Germany and/or Japan here ....

[ Reply to This | # ]

June MOR and another letter from SCO
Authored by: dc-houston on Monday, August 03 2009 @ 05:07 PM EDT
Now up on epic

[ Reply to This | # ]

Docket #888
Authored by: SeismoGuy on Monday, August 03 2009 @ 05:11 PM EDT
Looks like SCO is worried about having a trustee vs. an examiner :)

[ Reply to This | # ]

A/R is going down, over 90 aging going up
Authored by: relic on Monday, August 03 2009 @ 06:08 PM EDT
and the number are so small, they're almost cute...

This is in no way a going concern. Too bad the Cash for Clunkers program is
tapped out.

If I were interested in buying this thing, I'd wait for a trustee to clean house
to make the margin more attractive. No reason at all to negotiate with these
guys. And chapter 7 would be much better than 11.

Any prospective buyer showing their face now is either a sham or jostling to be
first in line when the SCOrpse stops twitching.

Salvage for scrap. Buy cheap after the deadfall is cleared, let the court
distribute the money, and then sell back any disputed remains to original
targets. Make a nice chunk of change and move on.

Meanwhile, Darl and Ralph can sit on the tailgate of their pickup and watch the
movers clean out their offices.

[ Reply to This | # ]

SCO's "Already Filed" Missing MORs Get Filed in Real Life - Updated: MORs for June and Another SCO Letter
Authored by: Anonymous on Monday, August 03 2009 @ 06:12 PM EDT

Why would Judge Gross appoint an examiner?

The motions are for a trustee. These letters are really out of order. In IBM's interpretation, an examiner would almost have the same roles as a trustee. Judge Gross would need to make up an idea, without a proper motion, and have it accepted.

Somehow, I can't see a Judge wanting to get creative. I would want a motion before me to proceed on some guidelines that have been well argued and well presented to the court. The examiner position has just been mentioned, and mentioned in an improper way. A trustee has been suggested by 3 different parties.

I can't see a Judge appointing an examiner, simply because SCO requests it, in a letter. Why would a Judge do this?

[ Reply to This | # ]

And now a letter from Novell (epiq)
Authored by: dc-houston on Monday, August 03 2009 @ 07:04 PM EDT
no text

[ Reply to This | # ]

No one suggested an examiner at all, except for SCO
Authored by: s65_sean on Monday, August 03 2009 @ 07:11 PM EDT
No one suggested an examiner just for an auction, though, with the SCO Board still in control while the examiner just advises, which was SCO's new brainstorm. However, this letter, while fairly subtle, seems to be agreeing to an independent examiner.
SCO was the only one that ever mentioned an Examiner. In this latest letter they point out to the judge that "The Debtor's" mentioned it in their response the the 3 motions to convert. They also point out that "The Debtors" contended at the July 27th hearing that a trustee was unwarranted, and that an Examiner would suffice. I guess if they refer to themselves in the third person enough, they hope that the judge might think that someone besides themselves actually mentioned an Examiner.

[ Reply to This | # ]

Are Signatures and Certificates of Service Significant?
Authored by: rsteinmetz70112 on Monday, August 03 2009 @ 07:18 PM EDT
One quick scan of the documents and I noticed that they are not signed by the
Debtors. Is that a problem? The only signature is the CFO. Is he and officer? Is
he under SOX?

I also didn't see the certificates of service which would be dated and signed by
the Lawyer, attesting when they were served.

---
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 | # ]

SCO's "Already Filed" Missing MORs Get Filed in Real Life - Updated: MORs for June and Another S
Authored by: Anonymous on Monday, August 03 2009 @ 07:24 PM EDT
As best as I can tell:
page 7 of item #884
SCO Group (Germany) GMBH 74,944.00 24,944.00
SCO HK (Japan) 755,xxx.00 xxxxxx
SCO Group Canana 28,054,00 x8.0xx
SCO Group France 70.00 70
SCO Software/... LTD 4.00 4
SCO xxx 0 49x,858
TOTAL OTHER ASSETS xxxxxx x,436,293

[ Reply to This | # ]

Sitting in LImbo
Authored by: webster on Monday, August 03 2009 @ 11:01 PM EDT

There are a lot of worn "F5" buttons around here. There's a lot going on and there's nothing going on. Maybe the next scrap filed will be legible.

  1. Voicemail from the Judge: At the end of the last article there was a speculation [No one wants it.] that Judge Gross couldn't find a trustee and the possible reasons. Add to that list dealing with the management. A lawyer when asked to do such a thing may want to review the file. Let's hope a few candidates are reviewing the file, just the bankruptcy file. Today's MOR's might jolt him/her a bit. Talk of billions has really dwindled.
  2. Such Filings: Letters, late, illegible MOR's. They are signs of desperation. Who insisted on these? The client is reading Groklaw and calling up the lawyers and screaming for action. The letters just accentuate SCO problems. So do the MOR's such as they are. It could be the lawyers covering their assets from later attack by SCO. SCO could blame them for not telling them to file them, and not asking for an examiner formally in any motion. Let's hope they're making a video documentary, eye to eye tension.
  3. No Fairy Backstop: This is the biggest source of despair. Where is that PIPE Fairy who put up the money for the lawyers? Couldn't he have piped it to a foreign middleman who could play SCO's sugar daddy? They haven't. This results in strange payments from executives and affiliates. It really does look like the end.
  4. A New Player: LNS is interested. They have acquired a discount as opposed to every future bidder. They acquired the Monopoly's debt at a discount. That's a relatively big chunk they don't have to pay if they win the bidding so they can bid higher. One wonders if there are any particular conditions or terms to their acquisitions. Of course the biggest discount holder is Novell. IBM is a big mess. The trustee or the buyer will try and make the best deal. They will want money while IBM and/or Novell will want some singing for a settlement. Maybe LNS has a backstop who will get this thing back on the road, maybe even with new lawyers adding Google. They have Linux and billions.

This is obviously driving some people mad.


webster

Tyrants live their delusions. Beware. Deal with the PIPE Fairy and you will sell your soul.



[ Reply to This | # ]

SCO's "Already Filed" Missing MORs Get Filed in Real Life - Updated 2Xs: June MORs, 2nd Letter
Authored by: Anonymous on Monday, August 03 2009 @ 11:59 PM EDT

Clang ... Bring out yer dead

Here's one.

That'll be ninepence.

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SCO's "Already Filed" Missing MORs Get Filed in Real Life - Updated 2Xs: June MORs, 2nd Letter & Novell Answer
Authored by: Anonymous on Tuesday, August 04 2009 @ 12:35 AM EDT
PJ, if you know who this is, I'm going to forward those MOR's to my dad to look
over, as he is a credit analyst/etc as you remember (and familar with
bankruptcy).

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Possible Chinese Wall
Authored by: Anonymous on Tuesday, August 04 2009 @ 03:10 AM EDT
SCO wanted to cash up their investment in the Chinese company.
The Chinese co. is not allowed (?) to make a direct payment to USA.
They can pay the Japanese subsidiary of SCO. Hence a "royalty"
from Japan of the same value as the "dissolution payment".

But I don't understand the last sentence:
> Upon completion of the dissolution of the Chinese company,
> the majority shareholder in the Chinese company will enter into
> a distribution agreement with the Company.

Does this mean when (if?) the Chinese co. is finally and utterly
wound up, SCO gets another handout?

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Has anyone else noted the dates on the MOR's?
Authored by: Anonymous on Tuesday, August 04 2009 @ 06:38 AM EDT
All of the MOR's for April, May, and June were signed by Ken Nielsen, CFO. All
of the signatures look pretty much identical, indicating that they were signed
by the same person. The signatures on the April MOR's are dated 6/4/09. The
signatures on the May MOR's are dated 7/7/09. The signatures on the June MOR's
are dated 7/30/09. This makes it appear as though SCO has done their due
diligance and created and signed the MOR's within the deadlines of the
bankruptcy rules, but that someone merely "forgot to file them with the
court".

In looking at the dates carefully, it appears like the dates have been written
by multpile different people. Is it possible that SCO has falsified the dates
that the MOR's were signed by Mr. Nielsen to create the appearance of an attempt
to comply with the deadlines?

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"...the Debtors would consent to an auction of the subject assets..."
Authored by: tiger99 on Tuesday, August 04 2009 @ 08:19 AM EDT
This is well out of order. The judge gives a ruling, and they OBEY. No consent about it, the days for consenting to seek ways of solving their problems are long gone.

This is like M$-speak, they tend to pretend that they, being nice guys, are consenting to do what is right, when a court had already ruled, several times.

It shows a mindest which considers themselves to be above the rule of law.

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SCO's "Already Filed" Missing MORs Get Filed in Real Life - Updated 2Xs: June MORs, 2nd Letter & Novell Answer
Authored by: Jhimbo on Tuesday, August 04 2009 @ 08:24 AM EDT
My NoScript seems to be broken. If I disable NoScript, the site works, and
"Groklaw" appears on the left hand top corner as ever. I'll leave
NoScript off pro tem.

Does anyone else on this thread use NoScript? I have v1.9.7.7
on my PC.
--
Jhimbo

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Japan and Novell's restricted cash
Authored by: UncleJosh on Tuesday, August 04 2009 @ 08:36 AM EDT
Perhaps the "restricted cash" in Japan is monies collected for SYSV
licenses that is to be given to Novell in exchange for a 5% collection fee?

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SCO's "Already Filed" Missing MORs Get Filed in Real Life - Updated 2Xs: June MORs, 2nd Letter & Novell Answer
Authored by: Anonymous on Tuesday, August 04 2009 @ 09:21 AM EDT
All of this stinks to heaven. In modern times there is no excuse for illegible
copies. The copies apparently contain numbers that are very fishy and
inconsistent. There appears jugglery with off-shore amounts of money.

It would appear that things happen which are grssly negligent or criminal. And
that this has been going on for a while and did not change in bankruptcy court,
nor is there much of an effort to hide it.

As there is not just mismanagement, but complete chaos, anything but assigning a
chapter 7 trustee would be utterly inappropriate. SCO is openly unable to run
their operations, let alone insolvency, and are burning and hiding money
everywhere.

It is likely that criminal investigations would be appropriate, but for that
somebody needs to get at the numbers. And since the numbers are not there and
apparently can't be produced by the current management, this has to be done by
somebody else.

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Foreign subsidiaries are bank accounts
Authored by: Anonymous on Tuesday, August 04 2009 @ 11:19 AM EDT
The Foreign subsidiaries that are with SCO in bankruptcy are nothing but bank
accounts. Up until this point there has been essentially no change in the values
of these companies month to month. Which indicates the bank accounts are
somewhere with a main account that is paying the fees.

As bank accounts it appears SCO has just started shuffling the money around.

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SCO's "Already Filed" Missing MORs Get Filed in Real Life - Updated 2Xs: June MORs, 2nd Letter & Novell Answer
Authored by: Anonymous on Tuesday, August 04 2009 @ 01:34 PM EDT
Like autumn leaves
their letters arrive at court
- it's their last summer.

/Andreas

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The most beautiful timing/ruling I could think of......
Authored by: Anonymous on Tuesday, August 04 2009 @ 01:41 PM EDT

On the same day, at the same hour, The Appeals Court issues it's ruling while Judge Gross issues his ruling.

The ruling from Judge Gross is immediate assignment of a Trustee as well as conversion to Chapter 7. The ruling indicates all business documents must be preserved and provided to the Trustee for an immediate audit.

The ruling from the Appeals Court indicates that the decision must go back to Kimball for review. All counts are found as correct except for the value Kimball assigned from the MS and SUN agreements. The order hints the value should be higher in favor of Novell.

Ok.... so I'm dreaming ;)

RAS

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So... We are still waiting eh? 1week +1 and counting
Authored by: SilverWave on Tuesday, August 04 2009 @ 01:51 PM EDT
Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter
7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter
7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter
7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter
7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter
7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter
7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter
7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter
7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter
7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...Chapter 7...




---
RMS: The 4 Freedoms
0 run the program for any purpose
1 study the source code and change it
2 make copies and distribute them
3 publish modified versions

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BBC - Redhat: 'Social mission'
Authored by: SilverWave on Tuesday, August 04 2009 @ 02:59 PM EDT
Good FOSS story on the BBC - Miracles do happen :P

"To improve society through our actions, that's really the genesis of open-source software."

---
RMS: The 4 Freedoms
0 run the program for any purpose
1 study the source code and change it
2 make copies and distribute them
3 publish modified versions

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Post trial communication
Authored by: Anonymous on Tuesday, August 04 2009 @ 05:27 PM EDT
This is something I was wondering about since the first letter... I thought
that communication directly with the judge outside of normal procedure was a
no-no, especially communications marked "confidential" and which
pertain to matters for which exhibits and supporting evidence have already been
vetted and entered, and that have already been heard.

It seems odd that Novell has to point this out. Shouldn't the judge have said
something when he got the firstr letter?

Or are SCO setting themselves up for some kind of 'procedural error' they can
appeal on later?

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Your Honor, would you mind ruling on *MY* schedule?
Authored by: Anonymous on Wednesday, August 05 2009 @ 10:39 AM EDT
"Uh, Judge Gross, sir, some of us are wearing out refresh
buttons on our keyboards. Your hesitancy to provide a
ruling are causing an extended load on epiq's chapter 11
docket for The SCO Group as well as additional work for the
team of IBM lawyers that make up groklaw."


:)

If this goes on much longer *I* am going to throw a chair!




---
Clocks
"Ita erat quando hic adveni."

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SCO's new SEC filings
Authored by: Laomedon on Wednesday, August 05 2009 @ 01:05 PM EDT
Apparently some of SCO's directors exercised stock options on Aug 3rd.

It appears that most of these stock options had a strike price of $0.13 while
the stock traded at about $0.13 resulting in very little to no actual gain on
exercise, just adding to their holdings.

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Why would Japan, as shown on page 12, be holding the restricted Novell money?
Authored by: Laomedon on Wednesday, August 05 2009 @ 01:35 PM EDT
One possible explanation was given by Darl during his testimony on July 27th. I've listened to his testimony on the recording available from the court. He said something at appx. 15.02, in response to a question by Spector why the deal with Norris fell apart:
"A: Yes, I believe in the fall of '07, if I'm not mistaken, Novell was concerned about a royalty stream that we, as part of our agreement with them in the '95 Asset Purchase Agreement, would pay to Novell, which was older versions of Unix that we collected, mostly out of Japan. We would send 95% of that revenue to Novell."

SCO is treating royalty payments due Novell as restricted cash so this would explain why SCO Japan has some of that.

If you recall, early on in the BK proceedings, Novell was concerned about royalty payments due Novell getting commingled with other monies and suggested some kind of escrow procedure but was rebuffed since the payments to Novell had to be made monthly instead of quarterly (due to Amendement 2 of the APA, IIRC).

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While we wait...Will On2's VP8 be open sourced by Google?
Authored by: SilverWave on Wednesday, August 05 2009 @ 02:51 PM EDT
Google may take aim at Web video standards with On2 purchase

---
RMS: The 4 Freedoms
0 run the program for any purpose
1 study the source code and change it
2 make copies and distribute them
3 publish modified versions

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SCO claims that Novell owes SCo royalties?
Authored by: s65_sean on Wednesday, August 05 2009 @ 02:56 PM EDT
On page 17 of the June MOR, there is a line under "Other Postpetition
Liabilities" labeled "Royalties Payable to Novell". The value on
this line for the petition Date, September 14, 2007, was 133,984, meaning that
SCO owed Novell that amount back then. The value for the same line for June 30,
2009 is (17,252), which indicates a negative. Does this mean that SCO thinks
that Novell owes SCO royalties?

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