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Ralph Yarro, SCO's "former Chairman" wants to loan SCO $2M - Updated - Oct. MORs & Motion Granted, Withdrawn,
Thursday, February 18 2010 @ 12:22 PM EST

You've been expecting this, I'm sure. Ralph Yarro wants to loan SCO some money, $2 million, or more accurately up to $2 million, and the SCO trustee, Edward Cahn, wants to let him. It's all at "arm's length" and "in good faith" negotiations with this SCO insider, don't you know. So, does this mean nobody else wants to fund SCO? No potential buyers? Just Ralph? And Cahn asks the court to please shorten the time to handle the motion. Is SCO on its last legs or something?

The motion calls Yarro the "former Chairman" of SCO's board of directors. See all the stuff you can hide if you don't file MORs or with the SEC, despite being a public company? Say, didn't Cahn promise to file those MORs by now? What, they look too awful? Still, they're supposed to be filed. Well, well. SCO's MO seems to be catching. Delay, delay, delay while they keep their greedy hand reaching desperately for the brass ring.

"The Trustee is advised that Seung Ni Capital Partners, L.L.C. is a newly formed entity formed by Ralph J. Yarro III (“Yarro”) and was created for the purpose of providing postpetition financing to the Debtors. Since Yarro is the former Chairman of the Debtors’ Board of Directors and the Debtors’ largest shareholder, Yarro is an insider pursuant to Bankruptcy Code section 101(31). See 11 U.S.C. § 101(31). The Trustee represents that at all times the negotiations among the Trustee, his advisors and Yarro were at arms-length and in good faith."
Wait. Look at page 2. It's a loan from Ralph in public and "other lenders from time to time". Uh oh. Page 3:
9. In accordance with the Credit Agreement, additional Lenders may also make loans to the Debtors under the Credit Facility from time to time.
Not another weirdo deal with shadows... Remember the York deal in 2007, speaking of shadows? It was a Super Dooper Senior Secured Super-Priority Credit Agreement too. We'd better look at the exhibits, which set forth the precise terms. I'll swing back by after I do that. My opinion of Judge Cahn sadly just went down a considerable peg. He's become an enabler now in my view, and while you don't despise a wife for being married to a drunk, if she buys the booze and covers for him when he's too drunk to go to work, is she not making herself part of the problem? The only thing that ever helps an alcoholic is to confront the consequences of what he's done, so he can get in touch with reality.

Here's the filing, so you can analyze the exhibits too:

a 02/18/2010 - 1051 - Motion to Authorize --MOTION OF CHAPTER 11 TRUSTEE FOR ORDER (I) AUTHORIZING DEBTORS ESTATES TO OBTAIN POSTPETITION FINANCING AND TO GRANT SECURITY INTERESTS AND SUPERPRIORITY ADMINISTRATIVE EXPENSE STATUS PURSUANT TO 11 U.S.C. §§ 105, 363(c), 364(c), 364(e) AND 507(b); (II) MODIFYING THE AUTOMATIC STAY PURSUANT TO 11 U.S.C. § 362; AND (III) GRANTING OTHER RELIEF Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. Objections due by 2/26/2010. (Attachments: # 1 Notice Notice of Motion # 2 Exhibit A # 3 Exhibit B) (Fatell, Bonnie) (Entered: 02/18/2010)

02/18/2010 - 1052 - Motion to Shorten Notice and Response to Trustees Motion for Order (I) Authorizing Debtors Estates to Obtain Post Petition Financing and to Grant Security Interests and Superiority Administrative Expense Status Pursuant to 11 U.S.C. §§ 105, 363(c), 364(c), 364(e) AND 507(b); (II) Modifying the Automatic Stay Pursuant to 11 U.S.C. § 362; and (III) Granting Other Relief Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. Objections due by 2/26/2010. (Attachments: # 1 Proposed Form of Order Order Granting Motion) (Fatell, Bonnie) (Entered: 02/18/2010)

Mr. Yarro has some history, speaking of good faith and ex-positions, from his Canopy days, when he was accumulating wealth. Well, dispensing it too, I gather.

Also I wanted to mention that the next bankruptcy hearing will be March 5. Nothing in February. They postponed:

02/16/2010 - 1050 - Notice of Adjourned/Rescheduled Hearing Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. Hearing scheduled for 3/5/2010 at 11:00 AM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. (Fatell, Bonnie) (Entered: 02/16/2010)

If anyone can OCR Exhibit A [pdf] for me, I'd appreciate it very much. For extra points, if anyone wishes to do a comparative chart of this Exhibit A with the York deal's Exhibit A [pdf], I think that would be very, very interesting and incredibly useful.

Update: The October MORs are filed. And Judge Gross has already signed the order granting SCO's request to shorten the time for their motion on getting the money from Ralph, and here comes another bill from Blank Rome:

02/18/2010 - 1053 - Order (WITH REVISIONS BY THE COURT) Granting Motion of Chapter 11 Trustee to Shorten Notice and Response to Trustee's Motion for Order (I) Authorizing Debtors Estates to Obtain PostPetition Financing and to Grant Security Interests and Superiority Administrative Expense Status Pursuant to 11 U.S.C. §§ 105, 363(c), 364(c), 364(e) AND 507(b); (II) Modifying the Automatic Stay Pursuant to 11 U.S.C. § 362; and (III) Granting Other Relief (related document(s) 1052 ) Order Signed on 2/18/2010. (SDJ) Modified text to add information on 2/18/2010 (SDJ). (Entered: 02/18/2010)

02/18/2010 - 1054 - Second Application for Compensation and Reimbursement of Expenses of Blank Rome LLP for the Period of November 1, 2009 Through November 30, 2009 Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. Objections due by 3/10/2010. (Attachments: # 1 Notice # 2 Exhibit A # 3 Exhibit B) (Fatell, Bonnie) (Entered: 02/18/2010)

02/18/2010 - 1055 - Debtor-In-Possession Monthly Operating Report for Filing Period October 31, 2009 (The SCO Group, Inc.; 07-11337) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Fatell, Bonnie) (Entered: 02/18/2010)

02/18/2010 - 1056 - Debtor-In-Possession Monthly Operating Report for Filing Period October 31, 2009 (SCO Operations, Inc.; 07-11338) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Fatell, Bonnie) (Entered: 02/18/2010)

02/18/2010 - 1057 - Notice of Withdrawal of Motion to Shorten Notice (related document(s) 1052 ) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Fatell, Bonnie) (Entered: 02/18/2010)

The judge altered the date that objections are due, however, from February 26 to March 1, and the hearing will be on March 5th. I have no idea why Cahn then filed a notice of withdrawal of the motion.

In the bill from Cahn's law firm, two things stand out to me. On page 6, I see a notation for November 24, 2009 "Teleconference with P. Hunt Regarding Counsel for R. Yarrow," and on page 7, I see a notation "Review Draft Agreement with K. McBride and Email Comments to S. Singer" on Nov. 4, 2009. And on November 9th, "Conference S. Tarr Regarding Stratboy." On that same day, it describes Jeff Hunsaker as having resigned. There are several notations about that. On November 24th, Bonnie Fatell reviewed "news article regarding SCO" amd a teleconference with P. Hunt "regarding debtor financing from R. Yarrow". That's a misspelling.

On November 2, we see settlement discussions with IBM's Richard Levin and with Novell. The next day there is a "detailed email regarding SVRX licenses" and some discussion about the Swiss arbitration. And the next day, Fatell conferenced with SCO's people on all that and with Cahn on "settlement strategy". Boies Schiller's Mauricio Gonzalez then sent a "detailed memo on APA and intent of parties". I'm sure we can just imagine how that read. Ryan Tibbitts chimed in too with a report on "intent of APA" and the next day Fatell is reading "information and documents from R. Tibbitts regarding transfer of copyrights". Then there was research on whether the APA was an executory contract, and on November 6, the team met to discuss "settlement strategy" and then had a teleconference "regarding preparation for settlement meeting" and then more emails with Mr. Levin about a protective order and email to J. Kessler from Tarr "Re Novell/IBM research". Then Fatell reviewed "draft Trustee outline for settlement meeting". Then on the 9th, there's a review of "Novell theory of sale", more strategizing, and then on the 11th the meeting happened. On the 19th, the notation reads "review license agreement with IBM regarding certain software." They'd rather we not know, but maybe the Sequent stuff? Anyway, all the strategy sessions were apparently for nothing, as no settlement ensued.

It's interesting that at the end of October, Cahn was saying publicly that SCO's claims were worth pursuing, while behind the scenes, he was trying to settle, and Novell and IBM wouldn't.

All through this time period, we also see AutoZone settlement notations, and clearly IBM and Novell were informed of a fair amount, and this time period was also when the Wayne Gray trademark issue was still happening, and there were lease negotiations going on too. For sure, Ms. Fatell is a hard worker. The bill comes to $106.082, 80% of the actual amount of services rendered, $132,602.50. Time for a loan from Yarro, I guess, looking at the MORs. Unless they can get a loan from Germany or Japan. All the assets seem to have ended up there.

Wait. Nov. 24, "Teleconference Regarding Paris Lease". Paris? As in France? Evidently yes, as the next day, there's a call with B. Linney "regarding French lease in Paris." I don't recall SCO having a presence in Paris. Do you?

There's a disclaimer with the MORs. Here's the last paragraph:

Historically, the Company may not have distinguished between direct liabilities of debtor and non-debtor companies. The Trustee with its financial advisors is conducting a thorough analysis of the intercompany arrangement among the debtors and the non-debtor subsidiaries and reserves the right to modify these MOR's upon completion of its review.
Update 2: Now there's more ping pong on the date for Cahn's motion to shorten the time be heard:

02/19/2010 - 1058 - Certificate of No Objection (related document(s) 1045 ) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Fatell, Bonnie) (Entered: 02/19/2010)

02/19/2010 - 1059 - Certificate of Service (related document(s) 1051 ) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Fatell, Bonnie) (Entered: 02/19/2010)

02/19/2010 - 1060 - Certification of Counsel Regarding Order Vacating the Order Granting Motion of Chapter 11 Trustee to Shorten Notice (related document(s) 1051 , 1052 , 1053 , 1057 ) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Fatell, Bonnie) (Entered: 02/19/2010)

Now that the judge granted his motion to shorten the time to object, Cahn would now like to vacate the motion to shorten the time. But in Exhibit A, attached to the main filing, it asks that the date for objections be set again for February 26th, not March 1, the date the judge hand wrote over the February date.

Huh? Well, at least we know that the judge and Cahn are not privately conferring closely, or at least not closely enough, since they can't seem to get this straight, not that Judge Gross doesn't do whatever Cahn asks, so far.

I can't explain it. He didn't do what they wanted perfectly, so now they want him to improve his compliance, I guess.


  


Ralph Yarro, SCO's "former Chairman" wants to loan SCO $2M - Updated - Oct. MORs & Motion Granted, Withdrawn, | 185 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Ralph Yarro, SCO's "former Chairman" wants to loan SCO $2M
Authored by: Gringo on Thursday, February 18 2010 @ 12:26 PM EST
Maybe they'll use the loan to pay Novell the money they owe
them. I am sure Mr. Yarro is also worried about the other
creditors and feel morally obligated to try to see that some
of them get paid as well.

[ Reply to This | # ]

Whose Money?
Authored by: Anonymous on Thursday, February 18 2010 @ 12:32 PM EST
So where is Ralf getting the money from? He might just be the front man, and
someone else is actually providing the money.

The thing to look at on all this will be the terms and conditions of the
loan(s). A "loan" is a good way to impose all sorts of terms and
conditions. What is more, they could require priority over other creditors.

[ Reply to This | # ]

What's the collateral?
Authored by: Anonymous on Thursday, February 18 2010 @ 12:43 PM EST
How come we can't see Exhibit C?

[ Reply to This | # ]

Inducement: 6.6% share of litigation
Authored by: Anonymous on Thursday, February 18 2010 @ 12:43 PM EST
The loan has a "fee" payable out of a 6.6% share of litigation winnings. See Page 12 of Exhibit A.

If SCO wins $25M in a settlement or court, Yarro is paid $1.65M as a fee. This payout is over and above any repayment of the loan, it is a fee for participation. The motion describes this as a material inducement.

If Novell settles for 25M on the eve of the trial, Yarro will have made an enormous return for a very short-time loan. Would Cahn offer this "fee" in good faith. It seems excessive.

Has Cahn detected antipathy between Novell and Yarro? Is this based on the DrDOS lawsuits where Novell cut Yarro's canopy out? Is the fee pressure on Novell to settle before March 5th when the "fee" arrangement will be approved?

[ Reply to This | # ]

Time to renew the motion on MORs
Authored by: Guil Rarey on Thursday, February 18 2010 @ 12:52 PM EST
This is a material development in the estate, the creditors have not been
suitably informed as to the state of affairs of the estate, and they probably
are in a position to appeal over the head of the bankruptcy judge NOW if they
don't get some satisfaction.

---
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 | # ]

"Superpriority"?
Authored by: AMackenzie on Thursday, February 18 2010 @ 12:52 PM EST
Let me guess. Yarro lends them $2M. They fritter that away in the accustomed
fashion. SCO finally goes into final, irrevocable bankruptcy (when?). Yarrow
takes his $2M back, leaving Novell $2M worse off than they would have been.

In effect, it's a motion to spend Novell's money on SCO's legal stuff. Surely?

[ Reply to This | # ]

Corrections here please
Authored by: nsomos on Thursday, February 18 2010 @ 01:03 PM EST
Please place any corrections here.
A summary in the title of the correction often proves useful.

For example :
"notice notice" -> "notice"

[ Reply to This | # ]

News Picks discussions here.
Authored by: Erwan on Thursday, February 18 2010 @ 01:09 PM EST
Please, quote the article's title.

---
Erwan

[ Reply to This | # ]

OT, the Off Topic thread.
Authored by: Erwan on Thursday, February 18 2010 @ 01:09 PM EST
As usual...

---
Erwan

[ Reply to This | # ]

Anything Comes...
Authored by: Erwan on Thursday, February 18 2010 @ 01:10 PM EST
Comes transcripts here, please.

---
Erwan

[ Reply to This | # ]

Déjà vu.
Authored by: Erwan on Thursday, February 18 2010 @ 01:14 PM EST

Feel like I've seen it before.

Super Dooper Senior Secured Super-Priority Credit Agreement, the article, the song.

---
Erwan

[ Reply to This | # ]

no new secured debt, MFN status for unsecured
Authored by: Anonymous on Thursday, February 18 2010 @ 01:17 PM EST
6.01 forbids SCO from entering into new secured debt agreements. 6.13 says that
if SCO takes on unsecured debt on "more expensive" terms, then Yarro's
firm gets paid at the new, higher rate. (6.13 is deceptively titled "right
of first refusal")

It's a death pact for SCO, unless $2M can miraculously restore them to
profitability with no need for further investment.

[ Reply to This | # ]

Crazy idea
Authored by: Anonymous on Thursday, February 18 2010 @ 01:20 PM EST
Here's a crazy idea. How about SCO not be allowed to partake in any new major
financial transactions (loans, leases, paying lawyers) until the missing MORs
are filed? I wonder if there is any precedence for something like that.

I find it baffling that SCO is allowed to fork out money (or accept loans like
this) while no one actually knows what their current financial situation
actually is.

I realize this hasn't been approved yet, but given this courts history, I
wouldn't be surprised if it was.

-DSW

[ Reply to This | # ]

Non-Core Assets
Authored by: Anonymous on Thursday, February 18 2010 @ 01:30 PM EST

In defining assets, the agreement states

"Non-core assets" means ... assets releated to SCO's mobility business.

It's funny how not that long ago SCO was expecting great things out that.

[ Reply to This | # ]

  • Rubbish. - Authored by: Anonymous on Thursday, February 18 2010 @ 06:17 PM EST
  • Paris Lease - Authored by: indyandy on Friday, February 19 2010 @ 09:21 AM EST
If Novell and IBM don't object . . .
Authored by: Anonymous on Thursday, February 18 2010 @ 01:30 PM EST

That's the only chance this has of being blocked. We've already noted they are
in this for the money. If they don't object, it's an easy decision. Then we can
move on to discuss why they don't object.

[ Reply to This | # ]

I like the bit
Authored by: Anonymous on Thursday, February 18 2010 @ 01:43 PM EST
where they decide to redefine a year as 360 days or is that normal ?

2.04 a

"(computed on the basis of the actual number of days elapsed over a year of
three hundred sixty (360) days)."

[ Reply to This | # ]

Ralph Yarro, SCO's "former Chairman" wants to loan SCO $2M
Authored by: dio gratia on Thursday, February 18 2010 @ 02:22 PM EST
1051
The Trustee submits that obtaining the relief requested herein is in the best interest of the Debtors, their estates and creditors and presents the best opportunity for the Debtors’ estates to maximize value from their assets and their estates through these cases for the benefit of all stakeholders.
Isn't Mr. Yarro the single largest stockholder as well? This certainly appears in his best interest.
SECTION 5.10. Use of Loan Proceeds/Sale of Core Assets/Use of Proceeds

from Sale of Core Asset and Other Assets. (a) Notwithstanding any other provision hereof or of the other Loan Documents, the Borrower may deposit up to fifty percent (50%) of the Loan proceeds into a segregated account to be used to pay past and ongoing Litigation trial costs and litigation related expenses of the Trustee, including the payment of the reasonable compensation expense of retaining Messrs. Tibbitts and Broderick, both SCO employees, to assist in the Litigation. The remaining fifty percent (50%) of the Loan proceeds may be used for SCO operational expenses, including, without limitation, unpaid administration expenses of the SCO Estates in the Trustee’s discretion.

Not to mention
Need to Use Cash Collateral 15.

This Motion proposes the use of the loan amount(s) under the Credit Facility, in order to fund ongoing working capital needs, Litigation (as defined in the Credit Agreement) related costs, and to provide ongoing liquidity. In addition to the access to the funding being provided by under the Credit Facility, it is imperative that the Trustee also have authority to use cash collateral subject to the terms of the Credit Agreement. Accordingly, in order to avoid immediate and irreparable harm to the Debtors’ businesses and their estates, the Trustee has an immediate need for authority to use cash collateral.

In other words a loan to fund a Litigation Lottery for someone who is broke and would otherwise be in Chapter 7, and oh, we expect you to hire two of the previous debtors-in-possession.
Credit Facility Should be Approved

16. The Trustee proposes to obtain financing under the Credit Facility by providing security interests and liens as set forth above pursuant to Bankruptcy Code sections 364(c). The statutory requirement for obtaining postpetition credit under section 364(c) is a finding, made after notice and hearing, that the trustee is “unable to obtain unsecured credit allowable under section 503(b)(1) of this title.” 11 U.S.C. § 364(c). Indeed, section 364(c) financing is appropriate when the trustee is unable to obtain credit allowable as an ordinary administrative claim.

No one else wanted to give them money. Exactly how does this determine that SCO is capable of meaningful rehabilitation again? Why can't this go on under Chapter 7? One could hope that the OUST would object at least to the hiring of former DIPs. Then again, maybe letting them get hired would advance the open source cause. Look at their wonderful track record to date.

There is no evidence that SCO can pay off the loan by the the Maturity Date, either, and don't you just love how some super priority conditions are slipped into the it's definition? Oh, then there's Section 6.01, wherein the loan can[1] be used to secure present indebtedness. Ya gotta wonder if they've been spending restricted cash, or is this to insure the lawyers get paid?

Being a raving paranoid, one could wonder if they case trustee might be more than willing to let the house of cards collapse after extracting 2 million dollars from Mr. Yarro in exchange for the "Core Assets" of no proven value or definition. Let's see how those motions in limine go.

[1] Oops, almost let that slip through as "can't".

[ Reply to This | # ]

SCO is broke!
Authored by: Gringo on Thursday, February 18 2010 @ 02:35 PM EST

Without postpetition financing, the Trustee would be unable to operate the Debtors’ businesses as a going concern
[From MOTION OF CHAPTER 11 TRUSTEE FOR ORDER AUTHORIZING DEBTORS’ ESTATES TO OBTAIN POSTPETITION FINANCING]

Without this money they are finished! No wonder there are no more MORs. Judge Khan didn't want to reveal the full extent of his incompetence - that is - that he is now unable to return any value at all to the creditors. He has squandered everything SCO had on the litigation lottery. The bankruptcy court was relying on Khan's expertise in litigation matters. It is now also clearly evident how bad the advise that he gave the bankruptcy court was.

[ Reply to This | # ]

"My opinion of Judge Cahn sadly just went down a considerable peg."
Authored by: ak on Thursday, February 18 2010 @ 02:52 PM EST
Finally.

My opinion was formed by searching the newsmeat.net database a few hours after
his name was mentioned the first time. And my opinion has not significantly
changed since then.

[ Reply to This | # ]

Proposed order
Authored by: turambar386 on Thursday, February 18 2010 @ 02:52 PM EST
Does anyone else find it odd that the proposed order is 10 pages long? I have
to wonder what little 'extra's Cahn has hidden in the order which may not be in
the actual motion or credit agreement.

[ Reply to This | # ]

Minion shortage
Authored by: Anonymous on Thursday, February 18 2010 @ 03:20 PM EST
Ralph Yarro may be a puppet, or he may be the mastermind. But in the past, he
has used others (Darl, York, etc.) to do the work.

But it seems that now, Yarro has run out of minions, and has to start fighting
battles himself. This is a very significant development. SCO is cracking.
(Think of various games - when you're fighting the boss monster or the #2
monster, you're getting there.)

MSS2

[ Reply to This | # ]

Novell's Motion in Limine #1 - Denied!
Authored by: ChrisP on Thursday, February 18 2010 @ 04:19 PM EST
nt

---
SCO^WM$^WIBM^W, oh bother, no-one paid me to say this.

[ Reply to This | # ]

This one seems scary
Authored by: Anonymous on Thursday, February 18 2010 @ 04:29 PM EST
As others have pointed out, the collateral is listed as basically everything
that SCO has that is worth anything.

My take is that it is a scam so that Yarro can loan SCO $2M and then SCO can
spend until there is slightly less than the $2M left in the coffers, at which
point Yarro swoops in and takes his "collateral", which includes all
of the cash left, almost his original $2M (and he has been collecting interest
all along, so he actually gets more cash back in total than he put in) plus all
of the other collateral, which looks to include all of SCO's precious IP and the
rights to take over the law suits, leaving SCO as a hollowed out shell of a UNIX
company that has no developers or support personnel and so must be converted to
chapter 7 at that point. Then Yarro takes the litigation ball and runs with it.

Please feel free to quiet my fears, but this is what I think is going to happen.


I think that Novell must step in and ask the BK court to create the constructive
trust (which Judge Gross hasn't yet ordered SCO to do, so that Novell's money
that SCO hadn't spent at the time of the tracing won't fall into the category of
"collateral".

[ Reply to This | # ]

Will this thing ever end?
Authored by: Anonymous on Thursday, February 18 2010 @ 04:34 PM EST

At SCO's current reduced "burn rate", $2 million will last them for several years. Just when we thought that this whole nightmare would finally come to an end because SCO was practically out of money, along comes yet another guy who has the financial resources to keep up the FUD and courtroom shenanigans for several more years.

This is turning out to be a very long fight.

[ Reply to This | # ]

cheap
Authored by: nola on Thursday, February 18 2010 @ 05:05 PM EST
So for a measly $2 million, Ralph gets all the records of SCO.

I guess he (or his friends) must have something to hide that's worth $2 million

or so.

"Follow the money"

[ Reply to This | # ]

  • cheap - Authored by: Anonymous on Thursday, February 18 2010 @ 09:26 PM EST
You need to be a lawyer ...
Authored by: Anonymous on Thursday, February 18 2010 @ 05:27 PM EST
... to really grok these documents, but, to this non lawyer the documents seem
to say "here's an offer up to $2M, from 'unspecified', but if you dont win
enough on the litigation - then 'unspecified' own everything you have EXCEPT
your liabilities.




[ Reply to This | # ]

Ralph Yarro, SCO's "former Chairman" wants to loan SCO $2M
Authored by: Anonymous on Thursday, February 18 2010 @ 05:49 PM EST
Which would have priority, Novell's prepetition money or Yarro's loan?

[ Reply to This | # ]

MOR bankruptcy filings
Authored by: ChrisP on Thursday, February 18 2010 @ 08:31 PM EST
1053 Order granting motion to shorten
1057 Withdrawing motion to shorten
What's going on there then?

1054 Blank Rome wants some money for November
and
1055 and 1056 October MORs!!!
Only another 3 months to catch up with.

---
SCO^WM$^WIBM^W, oh bother, no-one paid me to say this.

[ Reply to This | # ]

Ralph Yarro, SCO's "former Chairman" wants to loan SCO $2M
Authored by: joef on Thursday, February 18 2010 @ 08:48 PM EST
I read "Seung Ni Capital Partners, L.L.C" as "Sueing N[ovell]
[I][nc] Capital Partners, L.L.C". Or am I paranoid?

[ Reply to This | # ]

"Litigation" as defined in the Loan
Authored by: dio gratia on Friday, February 19 2010 @ 06:40 AM EST
Only includes Novell and IBM, not the arbitration or Redhat. Presumably the
loan can't be used for those cases.

Does Yarro know something we don't or is it a recipe for failure? (intentional
or otherwise)

[ Reply to This | # ]

I Don't Believe It, PJ!
Authored by: Ian Al on Friday, February 19 2010 @ 07:12 AM EST
How can you say 'Anyway, all the strategy sessions were apparently for nothing, as no settlement ensued'.

Anyway, first something more important. In the late 17th century a branch of the Knights Templar, the military wing of the Illuminati, fled to Japan to escape the tyranny of the Pope. They renamed themselves from The Knights Templar who like to say, 'Ni' to The Seung Ni Knights. If you check, you will find that Seung Ni Capital Partners, L.L.C. does not exist. What you don't know is that the Japanese SCOG subsidiary is, in fact, protected by the Seung Ni Knights and is run by the Illuminati. There, I can out-surreal anything that Cahn can come up with!

Now, back to the point. You wrote

On November 2, we see settlement discussions with IBM's Richard Levin and with Novell. The next day there is a "detailed email regarding SVRX licenses" and some discussion about the Swiss arbitration. And the next day, Fatell conferenced with SCO's people on all that and with Cahn on "settlement strategy". Boies Schiller's Mauricio Gonzalez then sent a "detailed memo on APA and intent of parties". I'm sure we can just imagine how that read. Ryan Tibbitts chimed in too with a report on "intent of APA" and the next day Fatell is reading "information and documents from R. Tibbitts regarding transfer of copyrights". Then there was research on whether the APA was an executory contract, and on November 6, the team met to discuss "settlement strategy" and then had a teleconference "regarding preparation for settlement meeting" and then more emails with Mr. Levin about a protective order and email to J. Kessler from Tarr "Re Novell/IBM research". Then Fatell reviewed "draft Trustee outline for settlement meeting". Then on the 9th, there's a review of "Novell theory of sale", more strategizing, and then on the 11th the meeting happened. On the 19th, the notation reads "review license agreement with IBM regarding certain software."
There, do you see it, now? SCOG only have interest in Unixware and Openserver licences or, as they define it, the trunk and leading branch of the Unix tree. What could a detailed email regarding SVRX licences be about? Could it be that Novell were asked if just receiving the money in the trust fund (snort!) would be OK as part of the settlement and they pointed out that Kimball had warned SCOG that they must continue to forward the SVRX royalties to Novell and permit audits of the same? Wouldn't that be the 'executory' part of the contract that they suddenly found so fascinating? Perhaps, in the panic to produce the MORs, that, somehow, got overlooked. And, why the interest after the meeting with IBM and Novell? Could someone have experienced a cold shiver down the spine after hearing Novell and IBM's view of the litigation?

Why would Cahn and Tibbitts be so interested in the 'intent of the APA' and the transfer of copyrights. That's for BS&F and Judge Stewart to worry about, isn't it? Why is Cahn spending money on that? Might he be starting to doubt that the copyrights made it from Novell to Santa Cruz and from Santa Cruz to Caldera? Same with the arbitration. Cahn has that safely stayed. Why would he spend money ruminating over it?

Then there was a review of the Novell theory of sale after all the above excitement. Might they suddenly be beginning to doubt BS&F's view given in the "detailed memo on APA and intent of parties"?

What about the license agreement with IBM regarding certain software? I don't think they mean the GPL and Counterclaim 10 or there would have been 'Review of Pamela's writings about the GPL'. Could it be that they are having cold feet about whether IBM can put their own copyright code in Linux under the SVrX licence?

So how do you feel, now, about

Anyway, all the strategy sessions were apparently for nothing, as no settlement ensued?

OK, fair enough.

---
Regards
Ian Al

Happy new year, miserable old lies.

[ Reply to This | # ]

The French Lease
Authored by: sk43 on Friday, February 19 2010 @ 08:40 AM EST
<<Wait. Nov. 24, "Teleconference Regarding Paris Lease". Paris?
As in France? Evidently yes, as the next day, there's a call with B. Linney
"regarding French lease in Paris." I don't recall SCO having a
presence in Paris. Do you?>>

That would be "The SCO Group SARL" - a holdover from Santa Cruz days.
The Paris address is

13, rue Camille Desmoulins
92441 Issy les Moulineaux

It was mentioned in this article:
http://groklawstatic.ibiblio.org/articlebasic.php%3fstory=20080510093748922

The lease is listed in the [1051-Exhibit A], schedule (3.10b) LEASED REAL ESTATE
(PDF page 44).

Among other things, this organization is the proud owner of
"UNXIS.FR".

[ Reply to This | # ]

Apart from the spying...
Authored by: Anonymous on Friday, February 19 2010 @ 11:38 AM EST
...since when has a child's behaviour in his/her own home been of any concern to
anyone other than his parents ?

[ Reply to This | # ]

  • Ooopss... - Authored by: Anonymous on Friday, February 19 2010 @ 11:39 AM EST
"Stratboy"?
Authored by: Anonymous on Friday, February 19 2010 @ 01:43 PM EST
"Conference S. Tarr Regarding Stratboy."

Now who could they be referencing here?

[ Reply to This | # ]

Ralph Yarro, SCO's "former Chairman" wants to loan SCO $2M - Updated - Oct. MORs & Motion Grante
Authored by: Anonymous on Saturday, February 20 2010 @ 07:46 AM EST
If Yarro has too much money, the lawyers will be more than happy to get it out
of his hands...

[ Reply to This | # ]

Seung Ni - Interesting name
Authored by: delboy711 on Sunday, February 21 2010 @ 03:46 PM EST
Seung Ni Capital Partners, L.L.C. is a newly formed entity formed by Ralph J. Yarro III
Interesting choice of name for the new company.
To me it suggests 'Sueing Novell & Ibm'

[ Reply to This | # ]

Compliance improvement
Authored by: Silurian on Tuesday, February 23 2010 @ 06:13 PM EST
> I can't explain it. He didn't do what they wanted perfectly, so now they
want him to improve his compliance, I guess.

Then in SCOGBK#1062 compliance improved? The deadline for objections reset to
February 26.

[ Reply to This | # ]

Novell files objectio #1065
Authored by: Laomedon on Friday, February 26 2010 @ 05:24 PM EST


DB02:9305605.1 066729.1001
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re:

The SCO Group, Inc., et al.,

Debtors.

)
)
)
)
)


Chapter 11

Case No. 07-11337 (KG)
(Jointly Administered)
Ref. Docket No. 1051
Objection Deadline: February 26, 2010 at 4:00 p.m. (prevailing Eastern time)
Hearing: March 5, 2010 at 11:00 a.m. (prevailing Eastern time)
NOVELL’S OPPOSITION TO THE TRUSTEE’S
MOTION FOR POSTPETITION FINANCING
Novell, Inc. and SUSE Linux GmbH (together, “Novell”) hereby objects to the
Motion of
Chapter 11 Trustee for Order (I) Authorizing Debtor’s Estates to Obtain
Postpetition Financing
[etc.] (filed February 18, 2010) (the “Motion”) of Edward N. Cahn, as chapter 11
trustee (the
“Trustee”) of debtors The SCO Group, Inc., and SCO Operations, Inc. (together,
“SCO” or the
“Debtors”). By the Motion, the Trustee asks the Court to approve very costly,
super-priority
financing to be used only for funding litigation against Novell and
International Business
Machines Corporation and for payment of post petition expenses; none of the
proceeds is set
aside for payment of prepetition creditors. Novell asks this Court to approve
the proposed
financing, if at all, only after careful consideration of the issues it raises
and only on terms that
protect Novell as a creditor and other creditors.
I. BACKGROUND
1. At the beginning of these cases, and as recently as September of 2008, the
Debtors
claimed that they could pay creditors in full.
1
Since that time, as the Debtors (and now the
Trustee) have pursued bet-the-company litigation against Novell and
International Business
Machines Corporation (“IBM”) at any cost, the estates steadily have shrunk. The
Motion

1
The Debtors made the same claim just last summer in connection with their
motion to sell that responded to the
motions to convert of Novell and others. But by that time, and with all that
had happened in between, no one was
taking those claims seriously any more.
DB02:9305605.1 066729.1001
2
represents the inevitable outcome of this unabated focus on the perceived
prospect of a major
win in the litigation, for if the Motion is granted, the creditors surely will
recover nothing unless
the litigation succeeds. Novell submits that putting this last nail in the
creditors’ (and it is one of
those creditors along with being a litigant) coffin when there are other
alternatives, simply
cannot be justified, especially since the real beneficiaries of the Trustee’s
gamble are SCO’s
owners. The propriety of the proposed financing is even more dubious in light
of other questions
and issues the Motion raises.
2. From the September 2007 outset of these chapter 11 cases, the Debtors’
position was
that all creditors would be paid in full no matter what. On April 2, 2008, they
told this Court in
connection with an abortive proposed plan of reorganization, “The only people
who should care
about these metrics and the other things will be the stockholders and perhaps
Mr. McMahon or
the U.S. Trustee because creditors will be getting cash on the barrel at the
point of confirmation,
so why do they care?” (4/2/08 Tr. 11:6-10).
2
Five months (and more missteps) later, they were
still saying the same thing: “We always have intended to pay them [the
creditors, including
Novell] in full. We still can pay them in full, [even] if the worse [sic]
should happen.” (9/16/08
Tr. 88:19-25). On that occasion, the Court granted them a further extension of
exclusivity based
in part on that representation.
3. By the time IBM, Novell and the United States Trustee made their motions to
convert
the cases in the Spring of 2009, it was clear that payment in full of creditors
was a vanished
dream absent a breakthrough result in the litigation. As Novell wrote,
As Novell and others pointed out, however, despite their repeated
promises to propose a confirmable plan, the Debtors not only have
failed to do so, but have lost $8.65 million since the Debtors filed
these cases on business operations alone. . . .
. . . .
Novell’s counsel observed at the March 30 hearing that these
losses mean that unless the Debtors some day achieve a fantastic

2
“Tr.” refers to “Transcript”.
DB02:9305605.1 066729.1001
3
win in the Novell litigation, the Debtors will be unable to pay
creditors in full. (3/30/09 Tr. 20:3-21.) That is because the
Debtors now show total assets of $8.3 million, of which the most
important (Unrestricted Cash of $728,537, net Accounts
Receivable of $1.4 million) total but $2.1 million; by contrast the
Debtors state that prepetition liabilities (without the still-
unliquidated claims of IBM or others in litigation with them) total
$6.9 million and postpetition liabilities total $4.84 million. (March
31, 2009 MOR, Balance Sheet.) Similarly, the Debtors report that
their assets have declined almost 50% since the filing of the cases
from $15 million to the present $8.3 million, while their
prepetition liabilities have increased almost fourfold from $1.9
million to the present $6.9 million (evidently, the Debtors have
chosen not to reflect large unliquidated liabilities in their
reporting). (Id.)
(Novell’s Motion for Conversion (filed May 11, 2009) (the “Motion to Convert”)
8-9; see also
Memorandum Opinion (filed August 5, 2009) (the “Conversion Opinion”) 6.) In
granting the
motions to dismiss, the Court observed:
These bankruptcy cases have been pending for 23 months. Were
the Court to approve the Sale Motion [which the Debtors had used
to try to counter the motions to dismiss], Debtors [sic] sole
business would be the Litigation . . . . [A]ll that the Debtors would
have to show for their millions of dollars of post-petition losses is
the Litigation. The Court is now unwilling to continue to wait
while the Debtors’ losses mount . . . .
(Conversion Opinion 9.) Elsewhere in the same decision, the Court wrote that
the Debtors’
losses were “staggering.” (Id. at 11.) The Court concluded, “[T]he Court must
take action to
protect the estate and its creditors. The outcome and time to reach finality of
the Litigation are
both too uncertain, while the continuing losses are not.” (Id. at 9 (emphasis
added).)
4. Unfortunately, it is clear that the estate’s resources nevertheless have
continued to
dwindle since the Trustee was appointed. The Trustee has only just filed the
October 2009
monthly operating reports. The Debtors’ assets had shriveled to $6.7 million
from the $8.3
million reported in March of 2009, unrestricted cash had declined from $728,537
in March to
just $397,912, and losses on operations before reorganization costs had swollen
from $8.65 in
March to $10.667 million.
3
And although the results for November, December and January are

3
The Debtors’ accounts receivable appear to have held at $1.4 million.
DB02:9305605.1 066729.1001
4
as yet still unreported by the Trustee, there is no reason to believe that
things have gotten
anything but worse.
II. THE FINANACING
5. And they are about to get potentially a lot worse – indeed, as bad as they
can be:
hopeless – for general unsecured creditors if the Court grants the Motion. Here
is a summary of
the most important features of the credit facility for which the Motion seeks
approval:
Lender. The lender is a “newly-formed” entity called Seung Ni
Capital Partners, L.L.C. (“SNCP”). The Motion identifies Ralph
Yarro, the Debtors’ former Chairman, as the person who formed
SNCP. The Motion does not disclose who the members of SNCP
are or where SNCP’s money is coming from.
Amount and Use. The Motion asks the Court for authority to
borrow up to $2 million for the purposes of: (1) funding the
Novell and IBM litigation, including payment of Messrs. Tibbitts
and Broderick to help with it; and (2) payment of expenses of
administration of the chapter 11 case. It does not provide for use
of the proceeds to pay any prepetition claims. The lenders can
reduce the $2 million commitment at its sole pleasure upon one
days’ notice.
Lien and Priority. The lender will be granted a super-priority lien
in virtually all of SCO’s assets. It will also be granted a super-
priority expense of administration claim (giving it the right to first
payment of cash if the lien otherwise proves inadequate for
repayment in full).
Cost. There are two principal components to the cost of the loan:
Interest and Related Charges. Basic interest is 6.6% per
annum. Default interest adds another 6%. There is also a late
charge of 5% of any defaulted payment.
Loan Fee. The credit agreement provides for a “Loan Fee”
that is payable come hell or high water (absent a default by the
lender) in addition to the amount of the loan and interest or other
charges. The fee really is an investment. It is 6.6% of what might
be called the lender’s supported share of any recovery of any kind
whatsoever in the litigation by settlement or judgment, including
such items as attorneys’ fees awarded to SCO. Specifically, it is
6.6% of: (a) the percentage of the $2 million commitment that the
lenders actually lend TIMES (b) the gross recovery in the
litigation. In the example used in the Motion, if the lenders
DB02:9305605.1 066729.1001
5
actually lend $1.5 million of the $2 million commitment and the
gross litigation recovery is $25 million, the “fee” is $1,237,500.
Other. The credit agreement also has a kind of most
favored nation provision that automatically modifies the terms of
the loan to match any “more expensive” terms that the Trustee may
obtain from any other lender in the future.
Repayment.
Basic Loan. The Trustee must repay the loan and all
interest upon maturity, default, dismissal or conversion of the
bankruptcies to chapter 7, or the resignation or incapacity of the
Trustee unless a person acceptable to the lender is appointed to
replace him. Maturity is October 31, 2011. In addition, the
Trustee must use the proceeds of any sale of “Core Assets” – assets
other than the litigation – to pay down any existing loan
indebtedness whenever any such sale occurs.
Loan Fee. The Loan Fee must be paid when the litigation
proceeds become available.
III. ANALYSIS
6. From these terms and in light of what is known for sure about the estates’
condition,
it is crystal clear that if the Trustee loses the litigation or manages only a
middling judgment,
there will be absolutely nothing with which to pay general unsecured creditors
(including Novell,
which has a claim of around $3 million). Already, as of the October 2009
monthly operating
reports, at best the estates could pay unsecured creditors only a miniscule
dividend out of
existing cash. Nor does it appear that the cash will be augmented in any
material way. So far the
Trustee has been unable in his six full months in office to sell any of the
estates’ assets to
generate any other funds. If the Motion is granted but the litigation fails to
produce meaningful
results, even the little that is left will be subject to super-priority lien and
claim for to $2 million
or more. Creditors, who were told that they would be paid in full as recently
as September of
2008, will be blanked.
7. Such a result is inequitable. It improperly shifts the risk of the
litigation from equity
to creditors.
DB02:9305605.1 066729.1001
6
8. The main purpose of the loan contemplated by the Motion is funding the
litigation.
Who benefits by this gamble? Nominally, the creditors may if the gamble
succeeds materially,
since they might recover more than what they could possibly recover now after
the Debtors and
Trustee have spent their money chasing the litigation for the last 30 months or
so. But if the
litigation fails, then the unsecured creditors are the losers because they will
get nothing. In short,
their upside is limited (and they never should have even had to worry about an
upside had the
cases been conducted properly), and their downside is a total washout.
9. The real beneficiaries of the risk are the holders of the Debtors’ equity,
including
Mr. Yarro, who Novell believes is a major shareholder.
4
Both the Debtors and now the Trustee
have been willing to risk the creditors’ recovery essentially for the benefit of
equity. If the
litigation thrives, equity stands to profit. If the case miscarries (or even
enjoys only limited
success), however, equity largely is no worse off than it was before the chapter
11 cases were
filed.
10. Equity should not thus get a free ride speculating on the litigation at the
creditors’
expense. If the claims in the litigation are so valuable, those who will
benefit most by them –
equity – should have been willing long go to buy them from the estates. But
equity has not done
so. And the reason why that is so is obvious: why should equity spend a penny
to exploit the
litigation if it can get the Debtors, estates and Trustee to pay for the
opportunity with the
creditors’ money, instead? This situation begs an answer to the question, “If
the gamble on
litigation flops, who will protect the creditors against the use of their
money?” Certainly, equity
has not offered to do that, and the Trustee has not made any arrangements for
that purpose,
either.
11. Novell submits that it is time to end this de facto subordination of the
rights of
creditors to equity. It is contrary to the priority of creditors over equity in
bankruptcy. See, e.g.,

4
As of September 13, 2007, the Debtors certified that Mr. Yarro personally owned
in the aggregate 5,505,949 shares
of stock in the SCO Group, Inc. – making him the company’s largest individual
shareholder by a wide margin. See
Certification Concerning Equity Security Holders, filed with The SCO Group,
Inc.’s voluntary petition [Docket No.
1].
DB02:9305605.1 066729.1001
7
Bankruptcy Code §§ 727(a), 1129(b)(2). It is still possible that a sale of
portions of the Debtors’
business (or a reasonable settlement that is based upon protecting the creditors
rather than
catering to equity’s dreams of a litigation gold mine) could produce some
proceeds that might
help the creditors materially (and perhaps even equity), but only if those
assets are not subjected
to a super-priority lien and claim for up to $2 million more.
12. The Motion also presents various disclosure issues:
A. The loan’s terms are very oppressive. For example, the
so-called “Loan Fee”, entitling the lender to a fixed
percentage of any litigation proceeds, is really an
investment in the litigation, not a typical loan fee based
on the amount of the loan. Moreover, that percentage is
not de minimis.
5
But the Motion does not detail these
important terms. And it simply quotes many of the major
terms at length rather than summarizing them (that is,
providing something of a road map) and referring the
reader to the relevant sections in the attached copy of the
credit agreement. See Fed. R. Bankr. P. 4001(c)(1)(B).
Only by reading the transactional documents would a
reader have a full appreciate for, e.g., the significance of
the Loan Fee.
B. There is no information on the lender, SNCP, other than
that it is “newly formed” and that former SCO chairman
Ralph Yarro is associated with it. Questions such as who
are its members and what if any is their relationship to
the Debtors, what are its financial resources, and whether
there are any side deals or understandings remain
unaddressed and unanswered,
6
in a manner that is
frustratingly reminiscent of prior forays of the Debtors.
(See, e.g., the Debtors’ Joint Plan of Reorganization;
Motion to Convert 4-5; Conversion Opinion 6; Debtors’
Motion to Sell Property Outside the Ordinary Course of
Business [etc.] (dated and filed June 22, 2009) (Stephen
Norris signatory to agreement on behalf of buyer

5
For sake of example, if the Debtors were to win the $5 billion judgment from
IBM that they have demanded, and if
SNCP actually lent $2 million to the Debtors, SNCP’s Loan Fee would be $330
million for making this $2 million
loan. Even assuming a judgment against IBM much more consonant with the
boundaries of possibility, let alone
reality, say, $50 million, SNCP would get, in addition to its interest, a “loan
fee” of $3 million for its $2 million
loan, plus all fees and expenses of SNCP (with any fees and expenses in excess
of $50,000 further diluting the
Litigation Proceeds).
6
A recent check of the Delaware Secretary of State’s records online does not
disclose the formation of SNCP. The
Court will recall an earlier incident where the Debtors promoted a deal with an
new entity that also had not, in fact,
been formed yet.
DB02:9305605.1 066729.1001
8
UNIXIS); Conversion Opinion 9-10 (Court doubts
“parties’ good faith”.)
C. The Motion claims that its request for super-priority
status for the lender is justified because the Trustee could
not find any better terms, but it fails to detail the
Trustee’s efforts. If the claims in the litigation were so
promising as to warrant risking the creditors’ potential
recoveries (if such a risk ever were warranted), that the
terms of the Motion’s credit agreement are the best the
Trustee could generate calls for some persuasive
evidence.
7

D. The Motion supplies no current financial about the
estates, and the most recent information available is in
the October 2009 MORs, the most recent reports
available, but which are a full calendar quarter short of
being current. Though as Novell has indicated above, the
chances are that there is virtually nothing left in the
estates, the Trustee nevertheless should be required to
provide contemporary financial information about the
estates to support his claim that there is no other way to
finance the Debtors than through the terms of the Motion.
13. Finally, it bears adding that the lender, SNCP, is also in essence
speculating for its
benefit at the expense of creditors by getting a super-priority lien and claim
to protect its
investment in the litigation that will wipe out the creditors if the litigation
fails. SNCP is, in
essence, using the creditors’ money to support the litigation for its own
profit, a profit that could
be quite handsome, indeed. Moreover, this opportunity for SNCP is virtually
risk free. If the
Debtors fail in their litigation, SNCP has a super-priority claim for the total
amount loaned (plus
all of SNCP’s fees and expenses) that is senior to all other creditors
(including Novell).
8

Moreover, the Motion provides SNCP with virtually friction-free remedies for a
default by

7
Indeed, it is ironic that after six months in office with the assistance of
capable counsel and professional advisors
(Ocean Park) of his choosing, the Trustee has neither been able to sell any of
the Debtors’ assets nor find reasonable
financing. After all, the Debtors convinced this Court to allow them to stay in
control by claiming that if they were
successful in the Tenth Circuit, investors and lenders would flood out of the
woodwork. Of course, that has not
happened. The Trustee has not sold any assets and has been unable to find any
financing except from an entity
affiliated with a long-time insider on the most egregious terms, entity that,
moreover, may be related to Stephen
Norris Capital Partners (note the identical initials – SNCP), a party that has
been in the background throughout these
proceedings waiting for a moment of weakness to capitalize on the Debtors’ (and
now the Trustee’s) financial
distress and anxiety to prosecute the litigation.
8
Hence, Mr. Yarro benefits not only as an insider/shareholder if the litigation
succeeds, but as a lender even if it
does not. If there are other shareholders who also are affiliated with SNCP,
the same will be true of them.
DB02:9305605.1 066729.1001
9
supplying advance stay relief that, arguably, would be available even on a loss
in the litigation
since that result might constitute a Material Adverse Effect that gives rise to
an Event of Default.
This virtual gift to SNCP at the creditors’ expense is inequitable, too.
CONCLUSION
The Motion is probably the last opportunity for the Court to take steps to
protect creditors
in case the litigation central to the Debtors’ and Trustee’s concept of the
purpose of these cases
proves unsuccessful. Novell respectfully submits that the Court should not
approve the Motion
unless a reliable mechanism is established for ensuring that creditors get paid
no matter the
outcome of the litigation. In any event, the Court should deny the Motion until
after there is
proper disclosure and an evaluation of the propriety of its terms.
Dated: February 26, 2010
Wilmington, Delaware

YOUNG CONAWAY STARGATT & TAYLOR, LLP
/s/ Sean T. Greecher
James L. Patton (No. 2202)
Michael R. Nestor (No. 3526)
Sean T. Greecher (No. 4484)
The Brandywine Building
1000 West Street, 17th Floor
Wilmington, Delaware 19899-0391
Telephone (302) 571-6600
-- and --
MORRISON & FOERSTER LLP
Adam A. Lewis
425 Market Street
San Francisco, California 94105-2482
Telephone (415) 268-7000
-- and --
MORRISON & FOERSTER LLP
Larren M. Nashelsky
1290 Avenue of the Americas
New York, New York 10104-0050
Telephone (212) 468-8000
Counsel for Novell, Inc. and SUSE GmbH

[ Reply to This | # ]

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