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SCO Bankruptcy: the Very Merry MORs of May
Wednesday, July 21 2010 @ 06:10 PM EDT

SCO filed its monthly operating reports for May. They had the Yarro loan, so these were still relatively flush days. If you are like me, you are deep into the transcripts from the trial, or you are analyzing Mozilla's draft MPL license, or both, so it's hard to focus on this. But the MORs are filed, so those of you who are more accounting-oriented will want to take a look.

As I look quickly through them, it looks like at the end of May, SCO could have paid back the Yarro loan in full. I realize they had just got it in March, and that that wasn't the goal in May. And this is July, not May. They took the loan to be able to keep the litigation going. And going. And going.

Guess how much they've spent in professional fees since this bankruptcy started? $5,097,729 plus $321,753 in expenses, not counting May or bills outstanding. So, the Chapter 11 bankruptcy has pretty much wiped out what they had when they started it, all to lawyers and other professionals helping them. Helping them do what? No wonder they keep postponing meeting with the bankruptcy judge lately. And no wonder they can't pay any creditors. Anyone notice this Chapter 11 thingie doesn't seem to be pointing toward success?

Here are the filings:

07/19/2010 - 1134 - Debtor-In-Possession Monthly Operating Report for Filing Period As of 5/31/10 (The SCO Group, Inc.; 07-11337) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Attachments: # 1 Certificate of Service) (Fatell, Bonnie) (Entered: 07/19/2010)

07/19/2010 - 1135 - Debtor-In-Possession Monthly Operating Report for Filing Period As of 5/31/10 (SCO Operations, Inc.; 07-11338) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Attachments: # 1 Certificate of Service) (Fatell, Bonnie) (Entered: 07/19/2010)

07/19/2010 - 1136 - Certificate of No Objection Re: Monthly Application for Compensation of (Seventh) of Ocean Park Advisors, LLC for the period April 1, 2010 to April 30, 2010 (related document(s) 1124 ) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Fatell, Bonnie) (Entered: 07/19/2010)

07/19/2010 - 1137 - Certificate of No Objection Re: Monthly Application for Compensation of (Eighth) of Ocean Park Advisors, LLC for the period May 1, 2010 to May 31, 2010 (related document(s) 1130 ) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Fatell, Bonnie) (Entered: 07/19/2010)

07/19/2010 - 1138 - Certificate of No Objection Re: Third Application for Compensation of Blank Rome LLP for the period December 1, 2009 to December 31, 2009 (related document(s) 1128 ) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Fatell, Bonnie) (Entered: 07/19/2010)

07/19/2010 - 1139 - Certificate of No Objection Re: Monthly Application for Compensation of (Fourth) Blank Rome LLP for the period January 1, 2010 to February 28, 2010 (related document(s) 1129 ) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Fatell, Bonnie) (Entered: 07/19/2010)

Anyone figure out how the total prepetition liabilities as of the date of their filing for bankruptcy in 2007 was $1,745,258 and now it's $1,181,271? Maybe that's showing the amount Boies Schiller forgave? And what would "retained earnings (13,446)" be? Salaries? Why retained? The professionals get paid but not the employees? And, um, aren't debtors supposed to at least stay current, in order to stay in Chapter 11?

Meanwhile, SCO KK in Japan, their sub there, still has $685,794 book value, but that's down from petition date's $765,366. SCO China on filing date was $497,858 and now it's book value is zero. And SCO Group's book value as of May 31 is $748,863. So they say. SCO Operations had $2,325,902 in cash at the beginning of May, no doubt reflecting the Yarro loan that I see listed prior to May at $1,950,000. So they really squeaked by, and only because of the loan, I guess. I'm no accountant, but if my checkbook looked like that, I'd say, "Uh oh." In May they had total receipts of $742,052. But then SCO Operations had disbursements in May of $772,909. That includes professional fees of $144,878, which is what was paid, I think, not total owed, since the docket shows a bunch of bills still working their way through the process, and paying the subsidiaries $179,935, so net cash flow was ($30,857), and at the end of the month, they show cash at $2,295.045.

Why don't they just pay Yarro back posthaste, and get that threat resolved, and then sell off everything they can, pay creditors ... What, am I dreaming? This is SCO. They'll instead keep paying lawyers and accountants and advisors and appeal their triple-play loss to Novell.


  


SCO Bankruptcy: the Very Merry MORs of May | 87 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
They have over a million of Novell's Money
Authored by: rsteinmetz70112 on Wednesday, July 21 2010 @ 06:32 PM EDT
If I'm reading these things right under the bank accounts they are listing SCO
Operations as holding $814,445 of Novell's money and Foreign Subsidiaries as
holding $441,299 more. That totals $1,255,724 of Novell's money they are
holding.

Of course they agreed to pay Novell some $625,486.90 a few days after the
closing date of this report.

That still leaves them with over $3,000,000 in unrestricted cash.

I also noticed they seem to be filing the reports less late now.

The April report was filed 07/06/2010.
The May report was filed 07/19/2010.

At this rate the June report may actually be on time.

---
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 | # ]

Corrections thread
Authored by: Aladdin Sane on Wednesday, July 21 2010 @ 06:32 PM EDT
Place corrections here. Mention the nature of the correction in the title of your post.

Thanks.

---
There is nothing unknowable—only that which is yet to be known. —The Fourth Doctor (Tom Baker)

[ Reply to This | # ]

[NP] News Picks
Authored by: Aladdin Sane on Wednesday, July 21 2010 @ 06:34 PM EDT
Comment on Groklaw News Picks beneath this comment. Mention which Groklaw News Pick you are commenting on.

---
There is nothing unknowable—only that which is yet to be known. —The Fourth Doctor (Tom Baker)

[ Reply to This | # ]

[OT] Off Topic
Authored by: Aladdin Sane on Wednesday, July 21 2010 @ 06:35 PM EDT
Comment off the topic of the article here.

---
There is nothing unknowable—only that which is yet to be known. —The Fourth Doctor (Tom Baker)

[ Reply to This | # ]

Retained Earnings
Authored by: ausage on Wednesday, July 21 2010 @ 06:37 PM EDT

Retained Earnings are the accumulated surplus (profit) carried over from one year to the next. (i.e. Earnings of the company that have been retained).

Now how SCO would have retained earnings when they continue to loss money every year is a good question?

[ Reply to This | # ]

COMES docs
Authored by: Aladdin Sane on Wednesday, July 21 2010 @ 06:37 PM EDT
Place Comes v. MS docs in this thread.

---
There is nothing unknowable—only that which is yet to be known. —The Fourth Doctor (Tom Baker)

[ Reply to This | # ]

SCO Bankruptcy: the Very Merry MORs of May
Authored by: Gringo on Wednesday, July 21 2010 @ 06:42 PM EDT

professional fees since this bankruptcy started? $5,097,729 plus $321,753 in expenses

This is outrageous. For what? How did that help the creditors in any way? This is Gross mismanagement (double entendre intentional).

[ Reply to This | # ]

Success
Authored by: Anonymous on Wednesday, July 21 2010 @ 06:44 PM EDT
Success? Of course chapter 11 has been a success. It has extracted 5 million
dollars owed to SCO's creditors and transferred it to the lawyers and to Judge
Cahn.

That's what bankruptcy is, right?

Why can't incompetent judges like Gross be disciplined?

[ Reply to This | # ]

  • Success - Authored by: Anonymous on Wednesday, July 21 2010 @ 07:19 PM EDT
  • Because - Authored by: Anonymous on Wednesday, July 21 2010 @ 11:35 PM EDT
  • Success - Authored by: DaveJakeman on Thursday, July 22 2010 @ 04:57 AM EDT
Still several things wrong
Authored by: Anonymous on Wednesday, July 21 2010 @ 10:17 PM EDT
a) bankruptcy accounting is supposed to be cash based. They are still carrying
$2M of goodwill as a bogus asset.

b) There is a large amount of liabilities in the 90 days past due column. This
is not supposed to happen in bankruptcy.

c) The disclaimer shows that Judge-Trustee Cahn has still not fulfilled one of
his primary duties in setting the books straight.

d) Almost $500k in wages and taxes payable. I believe the Trustee gets in
trouble if those are not payed at the end.

The raw numbers do not look good.
Total Real Assets* = 4,631,186
Total PostPetition Debts = 7,047,473

(real assets does not include Goodwill)

[ Reply to This | # ]

They're more than a month late
Authored by: Anonymous on Thursday, July 22 2010 @ 05:39 AM EDT

At the top of each report it says, "File with Court and submit copy to United States Trustee within 20 days after end of month". Why is Cahn allowed to ignore that? It's now 50 days after the end of May.

When he first took over, he had an excuse: he had to catch up. Now he hasn't an excuse. What justification is there for Gross to allow Cahn to flout the law?

[ Reply to This | # ]

Their operating income is strange
Authored by: Anonymous on Thursday, July 22 2010 @ 06:11 AM EDT

They appear to have revenue of about $650,000 per month. That means they still have customers.

What kind of company would be so imprudent as to rely on SCO continuing in business? Is this real income from real customers?

[ Reply to This | # ]

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