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Hearing Agenda and Novell Asks for All Notices
Wednesday, October 03 2007 @ 08:04 PM EDT

More bankruptcy filings. No objections have been filed, so some matters don't need a hearing, but others will be continued and heard later, either at the omnibus hearing in November, or when events make it appropriate. For example, SCO's request for privacy and to be able to keep certain things from the creditors has to wait until there is a creditors' committee set up. I don't exactly see how the creditors have had time to object to anything, but if I represented SCO, I'd want to hurry up and get things sped through like lightning myself. In any case it looks like Friday's hearing will be mighty uneventful, looking at the schedule. However, there are a couple of issues raised by the trustee or the court, like the incentive bonus, but they'll be handled at later hearings.

Here's the list of filings on the docket:
72 - Filed & Entered: 10/03/2007
Notice of Matters Scheduled for Hearing (B)
Docket Text: Notice of Agenda of Matters Scheduled for Hearing Filed by The SCO Group, Inc.. Hearing scheduled for 10/5/2007 at 01:30 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. (Attachments: # (1) Certificate of Service and Service List) (O'Neill, James)

73 - Filed & Entered: 10/03/2007
Notice of Appearance(B)
Docket Text: Notice of Appearance and Request for Service of Papers Filed by Novell, Inc.. (Nestor, Michael)

74 - Filed & Entered: 10/03/2007
Application to Employ (B)
Docket Text: Application to Employ Debtors' Application for Approval of Employment of Mesirow Financial Consulting LLC as Their Financial Advisor Mesirow Financial Consulting LLC as Financial Advisor Filed by The SCO Group, Inc.. Hearing scheduled for 11/6/2007 at 02:00 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 10/22/2007. (Attachments: # (1) Notice # (2) Exhibit A # (3) Proposed Form of Order # (4) Certificate of Service and Service List) (O'Neill, James)

As you'll see, Novell is like HP -- it wants *all* notices, pleadings, motions, objections, plans, whatever. Every move SCO makes, every step it takes, they'll be watching SCO.

You'll notice in Exhibit A, that Mesirow Financial Services has already been paid a retainer of $35,000. The entity's customary rates are as follows:

  • Senior Managing Director and Managing Director = $650-690/hr
  • Senior VP = $550-620
  • VP = $450-520
  • Senior Associate = $350-420
  • Associate = $190-290
  • Paraprofessional = $150

"With respect to this engagement," they tell the court, "assistance with the preparation of Schedule of Assets and Liabilities and the Statement of Financial Affairs shall be billed at a fixed fee of $35,000. All other services, as requested by the Company and agreed to by MFC, shall be billed at the normal and customary rates listed above, less a 10% discount to our fees as determined under the above rate structure." Of course expenses have to be covered too. This is bankruptcy for the rich and famous.

I got an interesting email from a reader who says if we wish to learn about such bankruptcies, we could do worse than to read up on the Marvel Comics story. It turns out that Laura Davis Jones, now representing SCO, was involved in that saga. By the way, here's a description of her and her work:

“Bright, committed and determined,” Laura Davis Jones rises to the top tier in Chambers’ rankings this year in acknowledgement of her growing reputation as “a player on the national scene who is responsible in many ways for putting Delaware on the map.” Her recent Chapter 11 representations include those in Trans World Airlines, W.R. Grace & Co, and Federal-Mogul, and she is also experienced in representation of creditor committees, bank groups and acquirers. Sources agree that she was instrumental in “giving Delaware the reputation of being a friendly place in which to file Chapter 11 cases and rehabilitating businesses.”

We've seen her effectiveness at the first hearing already. And no doubt we'll be seeing more. There is always an advantage if a lawyer is already known by a judge. And I gather she is known.

There's a book on the Marvel litigation, called Comic Wars. The subtitle is "How Two Tycoons Battled over the Marvel Comics Empire -- And Both Lost". Of course, that was before Spiderman, the movie. Here's Marvel Entertainment's 10K for 1997, which tells a bit about the legal proceedings at that point. Troubled Company described it as a real knock-down, drag-out fight, quoting an article in 1998 in the Toronto Financial Post. Here's the opening paragraph:

It reads like a story line lifted from a comic book: two superheroes do battle, blurring the line between virtue and villainy. In the process they lay waste to their surroundings and a few innocent bystanders are rubbed out. For Marvel Entertainment Group Inc., this was no fantasy. The superheroes at war were billionaire financiers and sometime corporate raiders Ronald Perelman and Carl Icahn. In their legal struggle for control of comic-book king Marvel, two of the world's richest men may have speeded its demise. The innocent bystanders in this story were the common shareholders of Marvel stock....

In the case of Marvel, Icahn's High River LP owned about US$40 million of the company's bonds, which pitted him against equity- holder Perelman for control of the flailing company. Icahn contested a reorganization by Perelman, which he said would diminish bondholders' investment, and eventually seized control of the company's equity, which had been offered as collateral on the bonds. His first move was to send Perelman packing and try to take control of Marvel himself.

The protracted legal fight was resolved only when the court appointed a trustee to help steer the company through bankruptcy protection.

I had no idea bankruptcy could be so exciting.


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