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Minutes from the October 23, 2009 SCO Bankruptcy Hearing
Saturday, October 24 2009 @ 01:01 PM EDT

A very small group met in the courthouse Friday in the SCO bankruptcy. The two motions filed by the Chapter 11 Trustee, Edward Cahn, were approved, so Tanner and Ocean Park Advisors will be on the job for Cahn. Here are the minutes [PDF].

Here are the filings:

10/23/2009 - 937 - Minutes of Hearing held on: 10/23/2009 Subject: OMNIBUS HEARING. (vCal Hearing ID (97406)). (related document(s) 931 ) (SS) Additional attachment(s) added on 10/23/2009 (SS). (Entered: 10/23/2009)

10/23/2009 - 938 - Order Approving Expansion of the Scope of Employment of Tanner LC as Accountants to the Debtors Nunc Pro Tunc to September 14, 2009 (related document(s) 917 ) Order Signed on 10/23/2009. (TAS) (Entered: 10/23/2009)

10/23/2009 - 939 - Order Granting Chapter 11 Trustee's Application for Authority to Retain and Employ Ocean Park Advisors LLC as Financial Advisor and Investment Banker Nunc Pro Tunc to September 15, 2009 (related document(s) 923 ) Order Signed on 10/23/2009. (TAS) (Entered: 10/23/2009)

The attachment to the minutes is a list of the attendees. Bonnie Glantz Fatell, of Blank Rome, representing the Chapter 11 Trustee, Edward Cahn, and Mr. Cahn, and Justin Rucki of Young Conaway Stargatt & Taylor LLP for Novell were the only lawyers there today. And Al Petrofsky was on the phone.

I don't recall seeing Mr. Rucki before, so I've added him to our Cast of Characters page. He is a bankruptcy specialist, in fact a specialist within the specialty:

Justin focuses his practice on issues relating to debtors, secured and unsecured creditors, and creditors' committees in chapter 11 cases.

Prior to joining the firm in 2009, Justin served as judicial law clerk to the Honorable Brendan Linehan Shannon, Judge of the United States Bankruptcy Court for the District of Delaware. During his clerkship he worked on numerous chapter 11 "mega-cases," including those of energy companies SemCrude, L.P. and VeraSun Energy Corp., manufacturers Fedders North America, Inc. and Motor Coach Industries, and a number of large cases originating in various other business sectors.

He earned his juris doctor from William & Mary's Marshall-Wythe School of Law in Williamsburg, Virginia. While in law school, Justin served on the Articles Selection Committee of the William & Mary Law Review and worked as a research assistant for Professor Peter A. Alces of the law school and Professor Ned W. Waxman of William & Mary's Mason School of Business. He earned his bachelor of science degree in Economics and Political Science from The Florida State University in Tallahassee, Florida, where he was editor-in-chief of the FSView & Florida Flambeau, the sixth-highest circulated college newspaper in the nation.

But no fireworks from any creditors today, I guess. IBM didn't feel it needed to send anyone, I see. So that's the smallest gathering yet, and that tells us to stay tuned. This isn't the hearing that matters, despite it being Mr. Cahn's debut as far as it being scheduled as his preliminary report on the estates, his first hearing since his appointment. There will be more to come. Much more, I have no doubt, judging from the Darl McBride letter to Mr. Cahn.

According to the Salt Lake Tribune's account, Cahn told the judge he'll pursue the Novell and IBM litigation, but that's not really news. He announced as much the other day, and again in the motion regarding the AutoZone proposed settlement, it was hinted at, and what choice does he have at this point? Boies Schiller are paid, and what basis would he have to say it isn't worth even trying, when copyrights are in the balance? The jury trial would naturally seem worthwhile to pursue, since what costs a lot in litigation is discovery, and that's over and done. If he didn't pursue that, he would surely open himself up to litigation by the shareholders McBride claims to be leading. And that costs money to pursue also, so all in all, it's the course of caution to pursue things at this point, or at least to talk like you plan to.

And what the report indicates to me, seeping out between the lines, is that, unlike AutoZone, who never really had a dog in this race, neither Novell nor IBM has been willing to settle out their cases with SCO. Perhaps the bankruptcy judge will try to force some kind of arbitration or settlement, but for sure, they are not interested or Cahn wouldn't be saying he's decided to pursue the litigation. He'd be announcing settlement agreements instead, and that didn't happen today.


  


Minutes from the October 23, 2009 SCO Bankruptcy Hearing | 259 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections here...
Authored by: Erwan on Saturday, October 24 2009 @ 01:02 PM EDT
If any.

---
Erwan

[ Reply to This | # ]

News Picks discussions
Authored by: Erwan on Saturday, October 24 2009 @ 01:02 PM EDT
Please, quote the article's title.

---
Erwan

[ Reply to This | # ]

OT, the Off Topic thread
Authored by: Erwan on Saturday, October 24 2009 @ 01:03 PM EDT
As usual...

---
Erwan

[ Reply to This | # ]

bankruptcy judge forcing some kind of arbitration
Authored by: Erwan on Saturday, October 24 2009 @ 01:07 PM EDT

>Perhaps the bankruptcy judge will try to force some kind of arbitration

If I were Novell, I'd insist for that arbitration to happen in a neutral country, like Switzerland.

---
Erwan

[ Reply to This | # ]

defend ??
Authored by: nola on Saturday, October 24 2009 @ 01:37 PM EDT
Cahn told the judge he'll pursue the Novell and IBM litigation
Is there anything left to pursue against IBM? Subject to the upcoming trial with Novell, of course, I had thought that all SCO's claims were dead and only IBM's counterclaims remained. Is he just keeping those options alive?

[ Reply to This | # ]

What IBM or Novell would have wanted...
Authored by: Guil Rarey on Saturday, October 24 2009 @ 02:16 PM EDT
IANAL and all other disclaimers apply.

We can't know for sure -- the gist of it must have been that a couple of
100,000-to-1-against litigations looked like a better options compared to what
IBM and Novell put on the table as their best and final offer.

So I'm curious what people think their best and final offer might have been.

There are no financial damages to be had from SCO that can make either IBM or
Novell whole, and they must know this. IBM can't possibly be interested in
money, though Novell may want their 95% cut out of the estate, which would leave
SCO dead unless various parties disgorged.

A declaration from SCO regarding the status of their ownership of UNIX and it's
relationship to Linux would be something both IBM and Novell would want, but I
can't see that being something the trustee would hesitate about.

So what is it then? IBM in particular is probably taking a longer view and
*really* wants to get past the corporate veil to nail the parties behind this.
Those terms may have been more than the trustee could swallow at this point.

This is all speculation on my part, and I'm curious what those with more
experience in settlement negotiations think.

---
If the only way you can value something is with money, you have no idea what
it's worth. If you try to make money by making money, you won't. You might con
so

[ Reply to This | # ]

Minutes from the October 23, 2009 SCO Bankruptcy Hearing
Authored by: Anonymous on Saturday, October 24 2009 @ 02:36 PM EDT
Ok, for those of us (primarily FOSS-Linux end users) WANLs, can some please
explain the 'settlement' references? As a multiple/various Linux OS end user,
I'm hoping to high heaven that these 'settlement' offers have nothing in them of
any capitulation on the part of Novell, IBM or any other defendant as to the
issue of any SCO pirated code in Linux.
Hopefully, those 'settlement' offers involve only what is due the defendants
FROM SCO, not anything owed to SCO or ground given on SCO claims to any Linux
code.

[ Reply to This | # ]

Wouldn't the trustee...
Authored by: Anonymous on Saturday, October 24 2009 @ 03:20 PM EDT
Wouldn't the trustee have to take some independent advice as to the merits of
these claims -- and one that takes into account the merits and likelihood of the
counter-claims succeeding as well, before deciding to pursue this nonsense into
the court room?

It seems ludicrous that someone should be able to mount a claim like this, while
not being able to settle a counter claim should that succeed. It seems
tantamount to blackmail to me -- ie, if you don't settle, we'll see you at trial
which will cost you a packet and even if you win, you won't see any money.
Therefore, by not giving in to our demands, you'll be cutting your nose off to
spite your face.

Not really the kind of behaviour you expect from an officer of the court.

[ Reply to This | # ]

"pursued aggressively" != "go to trial"
Authored by: UncleJosh on Saturday, October 24 2009 @ 04:31 PM EDT
IANAL but my brother is and he says that he gets his best settlements "on
the courthouse steps". As a retired judge and commercial litigator, the
trustee will know whether or not settling with Novell, IBM and Redhat makes
sense...I would guess it does, but what do I know?

[ Reply to This | # ]

Where did the Salt Lake Tribune get the information about the hearing from?
Authored by: Anonymous on Saturday, October 24 2009 @ 04:39 PM EDT
"SCO's claims against IBM and Novell "should be pursued
aggressively," Cahn told U.S. Bankruptcy Judge Kevin Gross, according to
Bloomberg News."

My attempts to find the "Bloomberg News" story has failed miserably,
perhaps someone here with better Google skills could find it for us?

[ Reply to This | # ]

Redhat and SuSe?
Authored by: Anonymous on Saturday, October 24 2009 @ 06:04 PM EDT
What happens to these? I know they are stayed, but does this mean that SCOX can
dispose of them and hold them off forever? Can Cahn just keep SCOX in BK an
unlimited amount of time and select what cases to do what with?

Something seems wrong here in that the BK has seemed to make SCOX invulnerable
yet allow them to continue their attacks only when it best suits them.

[ Reply to This | # ]

Minutes from the October 23, 2009 SCO Bankruptcy Hearing
Authored by: Anonymous on Saturday, October 24 2009 @ 11:16 PM EDT
Cahn told the judge he'll pursue the Novell and IBM litigation, (...) and what choice does he have at this point? (...) what basis would he have to say it isn't worth even trying, (...) If he didn't pursue that, he would surely open himself up to litigation by the shareholders McBride claims to be leading.

If Mr. Cahn simply walked in the door of SCO and tried to stop all the litigation on the basis that it obviously had no foundation, Darl and Ralf would kind of have to sue, wouldn't they? You can't have Darl and Ralf and the gang running the company for years, and then have an outsider come in and say "obviously these lawsuits are bogus". That would mean the other shareholders would sue Darl and Ralf. Darl and the gang would have to sue the trustee just to forestall lawsuits against themselves.

Mr. Cahn is going to have to be able to make a pretty clear case that the lawsuits shouldn't be pursued before he can start saying anything other than that he'll pursue the litigation. It's all very well for people to say that he's "running the company". The problem is though that the gang who were previously running it are best known for suing everyone in sight and they didn't suddenly vanish in a puff of smoke when Cahn was appointed. They're still quite able to make a lot of trouble. I wouldn't want Cahn's job.

The interesting thing to see will be what happens to SCO's main lawyers - Boise Schiller. If they were advising SCO to continue the case, then the trustee could decide to sue them for bad advice. If they were advising SCO to drop the case, then Darl and the gang have a lot of explaining to do. I imagine though that Boise Schiller were smart enough to simply make a lot of waffling noises whenever the subject came up in writing, and make encouraging noises off the record over the dinner table when they took the client out to lunch. Boise Schiller are the party who seem of have come out of this with all of SCO's money, so they will probably be subject to some pretty close scrutiny to see if any of it can be squeezed back out of them,

[ Reply to This | # ]

PJ, you materially misquote the Salt Lake Trib
Authored by: Anonymous on Sunday, October 25 2009 @ 05:57 AM EDT

You give the impression that Cahn will go through the process of pursuing the IBM and Novell lawsuits, without much enthusiasm or expectation of success.

His quoted words suggest otherwise:

SCO's claims against IBM and Novell "should be pursued aggressively," Cahn told U.S. Bankruptcy Judge Kevin Gross, according to Bloomberg News.

link to article

[ Reply to This | # ]

The Trustee has no choice but to continue
Authored by: Anonymous on Sunday, October 25 2009 @ 05:19 PM EDT
The Trustee just has to continue the litigation, for several reasons.

First of all, it's already paid for. Think of it like this: as much as you may
not like the lottery and the odds that go with it, if someone gives you an
already paid-for lottery ticket, you keep it just in case you win. The trustee
cannot throw away money, or in this case, the lottery ticket that's already paid
for.

Second of all, even if he wanted to get rid of the litigation, IBM and Novell
would have to let him. For IBM the only real things left are the
*counterclaims*, so the trustee is basically the defendant, not the plaintiff!
The Novell case he also has to continue for the same reason. A defendant cannot
just say "oops how about we do not do the lawsuit"....

He also needs to continue the Novell case to get clarity of the copyrights.
Until that case is done, it is unclear who owns the copyrights, and the
ownership is clearly important for the trustee to know what to do with the
company in terms of what assets it has/can sell etc. And again... the litigation
is all paid up for...

[ Reply to This | # ]

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