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SCO wants to try to sell its business assets at another auction January 14th
Thursday, January 06 2011 @ 04:45 PM EST

SCO wants to have another auction. The first one was a fizzle, or so they seem to be indicating, even though at the hearing back in August on SCO's desire to hold the first auction, they represented they had bidders lined up already. But no sale.

This isn't just another way to delay until after the January 20th oral argument in SCO's appeal of its loss to Novell, is it? Or avoid the inevitable discussion about defaulting on the Yarro loan, handing over the keys, and turning out the lights once and for all on SCO as we knew it? And what should us normal folks hope for in such a scenario as this?

That we knew The Rest of the Story of what's going on behind the scenes, methinks.

Here is the filing:

01/06/2011 - 1212 - Notice of Hearing // Notice of Modified Bidding Procedures in Connection With Auction and Sale of Substantially All of the Debtors' Software Business Assets Consistent With Form Asset Purchase Agreement and Free and Clear of Liens, Claims and Encumbrances Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. Hearing scheduled for 2/16/2011 at 04:00 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. (Attachments: # 1 Certificate of Service) (Fatell, Bonnie) (Entered: 01/06/2011)

In any case, they will try again to set up an auction, with a new minimum deposit to qualify to bid:
A potential Qualified Bidder of any Acquired Assets must timely submit a Qualified Bid for the Acquired Assets by January 14, 2011 that complies with Paragraph 7 of the Bidding Procedures Order in all respects except that the Deposit shall be in the amount of $100,000.
It was "an amount equal to 10% of the total purchase price set forth in the Modified APA" [see Sale Procedures Proposed Order, page 7] if you wanted to bid for all of SCO's business assets, more or less (not SCO Japan or Canada), except SCO's litigation rights regarding Novell, SUSE, IBM, Red Hat, and so forth.

Litigation rights. Funny way to phrase it, considering two judges and one jury have ruled it never had the right to sue anybody over copyrights it never owned.

Wait. What is the anticipated sale price that $100,000 is now enough? I mean, some of us cynics have been waiting and watching to see how in the world SCO plans to pay back Ralph Yarro and his money buddies, who loaned SCO $2 million. They get the assets on a default, don't they? They get 50% of whatever SCO gets from this asset sale in any case, no? So if the price is less than enough to pay the loan back, then what happens?

The new deadline is January 14 to get your bid in. The auction will be on January 19th at the law offices of Blank Rome. Heh heh. And they'll announce the highest bidder to all "contract parties" on January 21 and the deadline to object -- "solely on the grounds that they have not received adequate assurance of future performance with respect to their Assigned Contract" -- will be February 7 at 4 PM Delaware Time. All objections to the "Transaction" must be filed with the Bankruptcy Court and "served on the Notice Parties" by the same date and time. Then there will be a hearing on February 16 at 4 PM.

Sounds like they have a plan. Here's some information on the folks hovering around SCO in the past, who will all have this wonderful business opportunity once again.


SCO wants to try to sell its business assets at another auction January 14th | 189 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections here please, if needed
Authored by: tiger99 on Thursday, January 06 2011 @ 04:59 PM EST
Please indicate the nature of the correction in the title of your post to assist

[ Reply to This | # ]

Off Topic here please
Authored by: tiger99 on Thursday, January 06 2011 @ 05:00 PM EST
No on topic in this thread, please! And, it would be most helpful if you could
make clickable links where possible.

[ Reply to This | # ]

Newspick discussions here please
Authored by: tiger99 on Thursday, January 06 2011 @ 05:01 PM EST
Please indicate which Groklaw newspick item you are discussing in the title of
your post.

[ Reply to This | # ]

Keep the Comes transcripts coming here please!
Authored by: tiger99 on Thursday, January 06 2011 @ 05:03 PM EST
If you have been working on these, you don't need me to tell you what to do.

[ Reply to This | # ]

This is Cahn's idea of a bad joke, surely?
Authored by: tiger99 on Thursday, January 06 2011 @ 05:08 PM EST
$100k deposit just to be allowed to bid for the remnants of a bankrupt company with no significant assets, certainly not enough to build a viable future business. Does he think the whole world is daft?

Presumably if this sale fails it will be Chapter 7 immediately?

[ Reply to This | # ]

Err... I don't think that's what the Judges and Jury ruled...
Authored by: Anonymous on Thursday, January 06 2011 @ 05:25 PM EST

considering two judges and one jury have ruled it never had the right to sue anybody over copyrights it never owned
I'm certainly not any kind of representation of the legal field and P.J. is... but... as I understand, the question that has so far been decided has been:
    Did any of the Copyrights to Unix SysV transfer from Novell to SCOG?
As unfortunate as it is, the questions of:
    Does Linux infringe Unix copyrights?
    Did SCOG own the copyrights over which they initiated lawsuit?
... haven't been answered yet.

Although from my perspective, P.J.'s conclusion is dead on. Considering Title 17 makes it clear that the only one with standing is the copyright owner:

(b) The legal or beneficial owner of an exclusive right under a copyright is entitled, subject to the requirements of section 411, to institute an action for any infringement of that particular right committed while he or she is the owner of it.
Knowing SCOG, they simply won't accept the reasonable, logical conclusion. I sure wish the specific questions would be answered though. Perhaps then SCOG would stop presenting to Juries that Linux infringes their precciiioouusss and they have a right to the copyrights of said precciiioouusss in order to bring Justice about.

I know... that last is a long shot.... SCOG has yet to acknowledge the reality of any of the adverse rulings.


[ Reply to This | # ]

Wow... talk about selling the business and keeping it too...
Authored by: Anonymous on Thursday, January 06 2011 @ 05:33 PM EST

They get 50% of whatever SCO gets from this asset sale in any case, no? So if the price is less than enough to pay the loan back, then what happens?
Any purchaser - and this is general understanding from a non-lawyer unless a contract specifically says otherwise - is bound by the agreements a company they purchase makes. So the new purchaser is bound by the loan to Ralph.
    Loan amount: 2 million
    Purchase price: 1 million - assumed from the potential of 10% required and only 100k required
    Potential for buyer to pay loan: unknown
    Potential for buyer to default on loan: unknown
    Ralph collects 50% of the loan + potentially gets the business anyways: priceless (from Ralph's perspective)
All I gotta say for anyone considering making the purchase:
    Buyer beware, make sure you have the funds - after paying to purchase the business - to pay off the loan or your initial investment is money out the window.


[ Reply to This | # ]

Litigation Liabilities More Like it.
Authored by: rsteinmetz70112 on Thursday, January 06 2011 @ 05:44 PM EST
Probably no one wants the litigation, since SCO now owes Novell and will likely
owe IBM and possibly Red Hat.

I wonder what happened last time around.

I thought SCO reported that there was some "due diligence" going on
and that seemed to indicate at least one potential buyer.

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 | # ]

Where's Cerberus when you need them?
Authored by: Anonymous on Thursday, January 06 2011 @ 06:09 PM EST
You remember, the wealthy hedge fund Cahn has already rejected out of hand. The
one possible bidder I know of who could pay off the creditors, and stuff like

[ Reply to This | # ]

No one has mentioned that sleeping giant - the cure amounts
Authored by: Gringo on Thursday, January 06 2011 @ 08:09 PM EST
Many creditors complained during the last sale that they
could not accept the cure amounts estimated by SCO. Novell's
letter about that was particularly threatening - implying
that whoever bought Unix would have to answer to Novell for a
lot of money or be in a world of hurt. There were other
similar concerns from people who were owed money by SCO. Then
we heard nothing more.

[ Reply to This | # ]

"solely on the grounds that...."
Authored by: Anonymous on Thursday, January 06 2011 @ 09:38 PM EST
"solely on the grounds that they have not received adequate assurance of future performance with respect to their Assigned Contract"

That little bit brought a grin to my face. You may not object for any other reason. The Cahn has spoken!

[ Reply to This | # ]

I think we know where this is headed, don't we?
Authored by: keds on Thursday, January 06 2011 @ 10:07 PM EST
Nobody in their right mind is going to buy this turkey, and nobody outside of
Utah is going to put up $100K of cold, hard cash for the right to bid on it. We
know where this is headed, don't we? The Yarro loan will default, the stay will
be lifted automatically (per the loans terms that Judge Gross approved) and
Yarro and the other insiders ride off into the sunset with the whole thing.

Typical Utah business dealings.

[ Reply to This | # ]

I may be wrong, but is SCO creating a sale so it can read "Copyrights Transfered"
Authored by: Davo.Sydney on Thursday, January 06 2011 @ 10:15 PM EST
I might be totally wrong, and quite often I am. But is SCO trying to create a
TO [New Entity]..." thus creating an illusion to court that a new entity
purchased the copyrights? One they can hold up in court saying they are the

And has it happened before that a company has sold assets but retained
litigation rights. That would be a strange lawyer specialty. "XYZ Law Firm,
specializing in Litigation rights of sold copyrights..."

[ Reply to This | # ]

Legal Question - what if Yarro gets the assets
Authored by: Anonymous on Friday, January 07 2011 @ 12:40 AM EST
Assumption #1 is Yarro&Co manages to end up with SCO's assets due to the
terms of the superpriority loan structure.
Assumption #2 is Yarro then mouths off about SCO valuable IP being infringed by
linux etal.

Could IBM use the fact Yarro was SCO's majority owner and managed to manipulate
the bankruptcy process to end up with assets to assert that Yarro was
effectively continuing the SCO-IBM lawsuit. I presume it would be something on
the order of either the new owner of the assets swears IBM is blameless or as
the new owner is essentially the old owner in new clothes the new owner is
required to pick up the IBM lawsuit counter claim liabilities and all.

Has anything like this ever happened?

[ Reply to This | # ]

SCO Can't Sell What It Doesn't Own...
Authored by: sproggit on Friday, January 07 2011 @ 02:29 AM EST
The Courts have found that The SCO Group are the owners of those portions of
Unixware that they wrote *after* the transfer of the Unix business from Novell
to Santa Cruz back in the original transaction.

I may completely misunderstand this, but I *think* this means that any possible
buyer does not own any portions of the source code to the combined
"Unixware" that *have not* been changed since being delivered by

Now, Novell should be within their rights to

1. Refuse to sell *their* IP to SCO's buyer

2. Insist that SCO does not disclose their IP to the buyer either...

What we simply do not know is... what portion of the code base has been
completely re-written by SCO and what portion is "original" code?

I suspect that if the "original code" portion is significant, then any
buyer may well be purchasing something that will have zero commercial value,
because it may never be able to run as code in it's own right...

Had Novell not been sold I would hope to see their lawyers all over this. As it
is I think this may well be allowed to happen.

[ Reply to This | # ]

SCO wants to try to sell its business assets at another auction January 14th
Authored by: wvhillbilly on Friday, January 07 2011 @ 02:49 AM EST
Sounds like another ruse to me, just like all the ones that have gone before.

"It is written." always trumps, "Um, ah, well, I thought..."

[ Reply to This | # ]

  • Ding! Ding! Ding! - Authored by: Anonymous on Friday, January 07 2011 @ 04:36 PM EST
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