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The Bankruptcy Docket & All Filings - Hearing on Tuesday in Delaware
Saturday, September 15 2007 @ 11:04 AM EDT

Here they all are, the bankruptcy documents for the SCO Group. Note that there is a hearing on Tuesday, the 18th in Delaware, in case any of you are in that beautiful state. I am thinking SCO would like to move there and get away from Judge Kimball and his courtroom in Utah. You think? There is also a NOTICE of Filing for Bankruptcy by SCO Group [PDF] filed in the IBM docket sheet.

Here's the one you really want to read first: Declaration of Darl C. McBride, Chief Executive Officer, in Support of First Day Pleading [PDF].

I misstyped it initially as Fist Day Pleadings. Well, the brain knows what it knows.

This is the document where he tells the court basically why SCO should be allowed to file for Chapter 11 reorganization, which is for companies that are in a fix, but given a reorganization and a little breathing room, think they can remain in business. The judge must agree that it's realistic. Darl reveals that SCO asks the court to approve SCO hiring not one but four different law firms for the bankruptcy. One of them is, you guessed it, Boies Schiller. He asks the court to appoint them as special litigation counsel in the Chapter 11 case.

*Four* law firms? Why doesn't SCO just petition the court for approval to let it take all its money and throw it down a volcano so Novell can't get any?

This is all on pages 34 through 37. The other firms are Dorsey and Whitney as "special corporate counsel". Oh, and he says they need to employ Mesirow Financial Services as their financial advisor in connection with the Chapter 11 cases. And they want the court to let them employ Epiq Bankruptcy Solutions to help with claims noticing management and related services. The other two law firms are new, Berger Singerman and Pachulski Stang Ziehl & Jones. [PJ: Correction: An eagle eye reader spotted this. If you look on Groklaw's Cast page, Berger Singerman is not new to SCO, although new to this case. Look on the IBM Timeline page, and you will see the two lawyers from that firm listed in docket number 11 [PDF], way back in April of 2003, slightly before Boies Schiller showed up.]

No. Not a relative. I have no relatives who would lend a hand to this, I am positive, not even a 5th cousin twice removed.

SCO wants the court to let them pay these people monthly. You know, so they can keep track. One wouldn't wish to have to wait and pay at the end of services rendered. For one thing, lawyers might be able to do math, and they might wonder if they'd ever get paid at the end. SCO already paid one of the lawyers $72,928 plus change, I see in the Laura Davis Jones Affidavit [PDF]. That firm's standard rate for her services is $750 an hour. Paralegals are billed out for less than attorneys, and I see one person listed gets $375 an hour. That sounds like a para. Let's do the math. At that rate, that's 97 hours of work already by the lawyer as of the date of filing. I believe if she worked 24-days nonstop without sleeping, eating or talking on her iPhone, that would be 4 days for the lawyer. Or if the para did it all, then 194 hours, or 8 days. It's likely some combination.

Wait a sec. The Board of Directors swore it authorized the bankruptcy, according to the resolution, on September 13th, and it's now only the 15th. Can't compute. I know. It's corporate math. Well, at least they didn't backdate it.

So, if we assume that the lawyer for the bankruptcy didn't work 24-hour days, although maybe the para had to - joke joke -- would that mean that they've been working on this for at least a week or two? And would that mean that when Darl gave those interviews about SCO not being dead yet that journalists faithfully reported as if it were on stone tablets from heaven, he already knew they were going to file for bankruptcy? Well, many mysteries still to unfold.

Um... Isn't that kind of Novell's money SCO is spending? Why, yes. I think the court in Utah would think so, but we're in Delaware now, boys. Hahahaha.

Keep in mind that Novell has already gotten a ruling from the Utah court that SCO is liable for conversion back on August 10. That money, whatever the amount eventually proves to be, is not a debt, I don't reckon. It's Novell's money. It always was. SCO didn't pay it, but it was never SCO's money, according to my understanding of the ruling. Let me give you an example just to illustrate. If I rob a bank, I can't then run to bankruptcy court and file for protection so I can keep most of the money. That money was never mine, so I can't offer to pay the bank back at 10 cents on the dollar. I have to pay over whatever I stole, 100% or to the limit of what I have left in real life. Of course, I guess I could hire four law firms and some accountants to make sure that's how it works, and by the time we finish studying the law and filing blizzards of paperwork and the lawyers get paid before the decision is actually reached about whose money it is, why, rats. There's no money for the bank. I haven't got it any more. My lawyers do, but what can you do?

You may have noticed at the very bottom of the page of the court's explanation of Chapter 11 bankruptcy the following notes:

NOTES

1. Debts not discharged include debts for alimony and child support, certain taxes, debts for certain educational benefit overpayments or loans made or guaranteed by a governmental unit, debts for willful and malicious injury by the debtor to another entity or to the property of another entity, debts for death or personal injury caused by the debtor's operation of a motor vehicle while the debtor was intoxicated from alcohol or other substances, and debts for certain criminal restitution orders.11 U.S.C. 523(a). The debtor will continue to be liable for these types of debts to the extent that they are not paid in the chapter 11 case. Debts for money or property obtained by false pretenses, debts for fraud or defalcation while acting in a fiduciary capacity, and debts for willful and malicious injury by the debtor to another entity or to the property of another entity will be discharged unless a creditor timely files and prevails in an action to have such debts declared nondischargeable. 11 U.S.C. 523(c); Fed. R. Bankr. P. 4007(c).

So not everything is dischargeable in bankruptcy, and some things can be, but the creditor in certain cases can petition to block. In short, while I don't yet know what exactly Novell's position is in this new and very complex context -- you'd need to research case law to know that, which is likely what Novell is doing as we speak, although it's very possible they expected this and already know what the next move will be -- I think we can expect some moves from Novell. The hearing on all the motions filed will be on Tuesday, September 18, at the bankruptcy court located at 834 Market Street, 6th floor, Courtroom 3, in Wilmington, Delaware at 9:15 AM Eastern. I wouldn't be surprised to see Novell in attendance.

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

07-11337-KG The SCO Group, Inc.

Case type: bk Chapter: 11 Asset: Yes Vol: v Judge: Kevin Gross

Date filed: 09/14/2007 Date of last filing: 09/14/2007

History - Doc. - No. - Dates - Description

-- Filed & Entered: 09/14/2007
Case Assigned
Docket Text: Judge Kevin Gross added to case (GVW, )

-- Filed & Entered: 09/14/2007
Case Assigned
Docket Text: Judge Kevin Gross added to case (GVW, )

1 - Filed & Entered: 09/14/2007
Voluntary Petition (Chapter 11)
Docket Text: Chapter 11 Voluntary Petition of The SCO Group, Inc.. Fee Amount $1039. Filed by The SCO Group, Inc.. (Attachments: # (1) Board Resolutions # (2) Certification and List of 20 Largest Unsecured Creditors # (3) Certification and List of Equity Security Holders # (4) Corporate Ownership Statement # (5) Certification and Creditor Matrix) (Jones, Laura Davis)

2 - Filed & Entered: 09/14/2007
Motion for Joint Administration (B)
Docket Text: Motion for Joint Administration Debtors' Motion for Order Directing Joint Administration of Related Chapter 11 Cases Filed By The SCO Group, Inc. Hearing scheduled for 9/18/2007 at 09:15 AM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. (Attachments: # (1) Proposed Form of Order)(O'Neill, James)

3 - Filed & Entered: 09/14/2007
Affidavit in Support (BF)
Docket Text: Affidavit in Support Declaration of Darl C. McBride, Chief Executive Officer in Support of First Day Pleadings Filed By The SCO Group, Inc. (O'Neill, James)

4 - Filed & Entered: 09/14/2007
Application to Employ/Retain (BF)
Docket Text: Application to Employ/Retain Debtors' Application, Pursuant to 11 U.S.C. Section 327(a) and Fed. R. Bankr. P. 2014(a) and 2016, for Approval of Employment of Berger Singerman, P.A. as Counsel for Debtors Nunc Pro Tunc to the Petition Date Berger Singerman, P.A. as Counsel for Debtors Filed By The SCO Group, Inc. (Attachments: # (1) Declaration of Arthur J. Spector in Support of# (2) Proposed Form of Order)(O'Neill, James)

5 - Filed & Entered: 09/14/2007
Application to Employ/Retain (BF)
Docket Text: Application to Employ/Retain Application of the Debtors Pursuant to Section 327(a) of the Bankruptcy Code, Rule 2014 of the Federal Rules of Bankruptcy Procedure and Local Rule 2014-1 for Authorization to Employ and Retain Pachulski Stang Ziehl & Jones LLP as Bankruptcy Co-Counsel for the Debtors and Debtors in Possession Nunc Pro Tunc to the Petition Date Pachulski Stang Ziehl & Jones LLP as Co-Counsel for the Debtors and Debtors in Possession Filed By The SCO Group, Inc. (Attachments: # (1) Statement # (2) Affidavit of Laura Davis Jones in Support of# (3) Proposed Form of Order)(O'Neill, James)

6 - Filed & Entered: 09/14/2007
Motion to Approve (B)
Docket Text: Motion to Approve Debtors' Motion for An Administrative Order Under 11 U.S.C. Sections 105(a) and 331 Establishing Procedures for Interim Monthly Compensation and Reimbursement of Expenses of Professionals and Reimbursement of Expenses of Committee Members Filed by The SCO Group, Inc.. (Attachments: # (1) Proposed Form of Order) (O'Neill, James)

7 - Filed & Entered: 09/14/2007
Motion to Maintain Bank Accounts (BF)
Docket Text: Motion to Maintain Bank Accounts Debtors' Motion for Authority to (I) Maintain Existing Bank Accounts, (II) Continue to Use Existing Business Forms, (III) Continue to Use Existing Cash Management System, and (IV) to Excuse Section 345(b) Deposit and Investment Requirements Filed By The SCO Group, Inc. (Attachments: # (1) Proposed Form of Order)(O'Neill, James)

8 - Filed & Entered: 09/14/2007
Motion to Authorize (B)
Docket Text: Motion to Authorize Debtors' Motion for an Order (I) Authorizing the Debtors to (A) Pay Prepetition Wages, Salaries, Commissions, Employee Benefits and Other Compensation; (B) Remit Withholding Obligations; (C) Maintain Employee Benefits Programs and Pay Related Administrative Obligations; and (II) Authorize Applicable Banks and Other Financial Institutions to Receive, Process, Honor and Pay Certain Checks Presented for Payment and to Honor Certain Fund Transfer Requests Filed by The SCO Group, Inc.. Hearing scheduled for 9/18/2007 at 09:15 AM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. (Attachments: # (1) Proposed Form of Order) (O'Neill, James)

9 - Filed & Entered: 09/14/2007
Motion to Pay Sales and Use Taxes (BF)
Docket Text: Motion to Pay Sales and Use Taxes Motion of the Debtors for an Order (I) Authorizing the Debtors to Pay Prepetition Sales and Use, Franchise and Similar Taxes and Regulatory Fees in the Ordinary Course of Business and (II) Authorizing Banks and Financial Institutions to Honor and Process Checks and Transfers Related Thereto Filed By The SCO Group, Inc. (Attachments: # (1) Exhibit A # (2) Proposed Form of Order # (3) Exhibit A)(O'Neill, James)

10 - Filed & Entered: 09/14/2007
Motion Prohibiting Utilities from Discontinuing Service (BF)
Docket Text: Motion Prohibiting Utilities from Discontinuing Service Debtors' Motion for an Order Under Section 366 of the Bankruptcy Code (I) Prohibiting Utility Providers from Altering, Refusing or Discontinuing Service, (II) Deeming Utilities Adequately Assured of Future Performance, and (III) Establishing Procedures for Determining Adequate Assurance of Payment Filed By The SCO Group, Inc. (Attachments: # (1) Exhibit A# (2) proposed Interim Order # (3) Exhibit A)(O'Neill, James)

11 - Filed & Entered: 09/14/2007
Motion to Authorize (B)
Docket Text: Motion to Authorize Motion of the Debtors for an Order Providing that Creditor's Committees are not Authorized or Required to Provide Access to Confidential Information of the Debtors or to Privileged Information Filed by The SCO Group, Inc.. (Attachments: # (1) Proposed Form of Order) (O'Neill, James)

12 - Filed & Entered: 09/14/2007
Application to Employ/Retain (BF)
Docket Text: Application to Employ/Retain Under 28 U.S.C. Section 156(c) Epiq Bankruptcy Solutions as Noticing, Claims and Balloting Agent Filed By The SCO Group, Inc. (Attachments: # (1) Exhibit A # (2) Declaration of Daniel C. McElhinney # (3) Proposed Form of Order)(Jones, Laura Davis)

13 - Filed & Entered: 09/14/2007
Notice of Hearing (B)
Docket Text: Notice of Hearing On First Day Motions Filed by The SCO Group, Inc.. Hearing scheduled for 9/18/2007 at 09:15 AM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. (Attachments: # (1) Certificate of Service and Service List) (Jones, Laura Davis)


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