decoration decoration
Stories

GROKLAW
When you want to know more...
decoration
For layout only
Home
Archives
Site Map
Search
About Groklaw
Awards
Legal Research
Timelines
ApplevSamsung
ApplevSamsung p.2
ArchiveExplorer
Autozone
Bilski
Cases
Cast: Lawyers
Comes v. MS
Contracts/Documents
Courts
DRM
Gordon v MS
GPL
Grokdoc
HTML How To
IPI v RH
IV v. Google
Legal Docs
Lodsys
MS Litigations
MSvB&N
News Picks
Novell v. MS
Novell-MS Deal
ODF/OOXML
OOXML Appeals
OraclevGoogle
Patents
ProjectMonterey
Psystar
Quote Database
Red Hat v SCO
Salus Book
SCEA v Hotz
SCO Appeals
SCO Bankruptcy
SCO Financials
SCO Overview
SCO v IBM
SCO v Novell
SCO:Soup2Nuts
SCOsource
Sean Daly
Software Patents
Switch to Linux
Transcripts
Unix Books
Your contributions keep Groklaw going.
To donate to Groklaw 2.0:

Groklaw Gear

Click here to send an email to the editor of this weblog.


To read comments to this article, go here
SCO Asks to File Severance/Benefits Info Under Seal in Bankruptcy Case
Monday, October 15 2007 @ 05:48 PM EDT

There is another hearing scheduled in the SCO Chapter 11 bankruptcy. On October 25, there will be a hearing at 4 PM Eastern time. The hearing will be about the SCO motion to seal [PDF]. Yes, friends. They want a private moment in the bankruptcy.

This has to do with SCO's motion to pay [PDF] its employees the severance and benefits they expected if they are terminated post-bankruptcy. SCO says it wants to keep the severance terms and the names of terminated employees and severance amounts private. So far, all they have said publicly is that they terminated some employees in the finance department. And SCO lists Bert Young as the one insider affected by this motion. But there is an unnamed "management employee" affected too who is also terminated. The motion to seal says that SCO started with 123 employees, but they have "or will shortly" let go 16 employees. They anticipate there could be more.

They total the amount they propose to pay to nonmanagement, noninsiders as a group as $6,685.95. SCO says the severance pay for Young and the "management employee" is "less than ten times the severance pay to be given in the same calendar year to the nonmanagement terminated employees." I assume that's the $6,685.95 figure, but since we don't know when there could be more layoffs, I don't actually know. Anyway, SCO wants to pay them what they expected before SCO filed for bankruptcy protection:

6. Contemporaneously herewith, the Debtors filed the Severance motion. Pursuant to the Severance Motion, the Debtors seek approving the payment of severance and accrued benefits to non-insider terminated employees as well as to one insider, terminated employees pursuant to ordinary course programs established by the Debtors' prior to the Petition Date. The Severance Motion summarizes the Severance Policy, but does not disclose the identity or specific amount proposed to be paid to each Terminated Employee.

On its face, one might simply think it's not enough money to worry about, all things considered, the way SCO portrays it. But because it involves Bert Young, I'm thinking some might wish to object, if only because he's a defendant in another bankruptcy already, the one regarding MarchFIRST, where Young was briefly CFO. That doesn't mean he's guilty, of course, but it means it'd be natural to want to look a little more closely, particularly since the allegation there was waste of corporate assets. Last I looked, the matter has not yet been resolved. Let's assume for the sake of argument that he's not guilty at all in that case. He would naturally want the court in this next bankruptcy to put a stamp of approval on his severance package, if only to protect him from any future shareholders on a rampage. If I were him, I'd want that to happen, and you would too. Being put through litigation is something one never does twice, if there is a way to avoid it. I was even wondering if he quit precisely to avoid any possibility of a replay. You can almost hear the "Oh no, not again." That's what one can imagine if he's not guilty.

I totally get individuals wanting at least some privacy. The Bankruptcy Code does allow for sealing to protect an individual from identity theft or "other unlawful injury". The motion quotes the language for you. But then the motion goes on and on about protecting trade secrets and private commercial information. So maybe this is about protecting SCO more than the individuals terminated. It is very mysterious. "The Debtors are fearful that their current employees as well as the identified Terminated Employees may experience harassment from others in the Debtors' industry." Huh? And a footnote says there are numerous internet postings discussing the case already. Perhaps the court can figure out a nice balance where the individuals can be protected, while allowing information like severance terms to be made public. SCO's motion, rather implausibly, to me anyway, argues that if the information is made public, "poaching" of its remaining employees by competitors may happen. I consider that unlikely, since their problem is more likely to be extreme difficulty in getting hired by anyone in the industry ever again. Then SCO adds this:

Moreover, the Debtors have become aware of threats being made to individuals relating to anticipated letting go of employees by the Debtors. To disclose this confidential information to the public at this point in time may expose the identified and non-identified Terminated Employees to additional threats and harassment.

Does that make sense to you? I can't tell from the language who is threatening whom. Are employees threatening SCO to try to forestall being let go? That seems an unlikely employee job retention strategy. Any threats so far would have to be SCOfolk v. SCOfolk, I think, since no one knows the names of any of those terminated yet. Or is this referring to the folks already terminated in the Finance Group? There is an untold story there. Is the language implying that they are on the warpath? That they'd get upset, maybe, if friends go let go and the bigwigs float away with fabulous golden parachutes? I don't know, because the language is so unclear. I'd need to see some specifics on this, as it sounds unbelievable. SCO has made such wild statements in the past in what turned out to be, from all I've ever seen, a smear campaign to make Linux users seem dangerous. So I'm a little from Missouri on this one. On the other hand, I've received threats myself, not from Linux people, but the other side, so maybe that is who they mean. After all, why would anyone else but SCO folk be upset that they were laying off people?

In short, the story is getting ugly. I know that doesn't surprise you. The one argument that SCO makes that is rational sounding is that if employees know they will get severance, they'll be less likely to look around for a job right now, to avoid a payment gap. Any such mass exodus would be detrimental to SCO, which is claiming a desire to stay in business, after all. I notice SCO also asks that any terminated employee have to sign a release "of any and all claims they may have against the Debtors".

SCO offers to give the sealed information to the US Trustee and counsel of any "official committee of unsecured creditors", if appointed. That hardly seems a broad enough group, unless they plan to put Novell and IBM on the committee. And what if there is never a committee? This motion is talking about paying what could conceivably be a great deal of money, and Novell might just feel that it's money that should go to Novell instead. How are they to know, though, if they can't see the terms and details? You may recall the largesse in the old Canopy, when it was headed up by Ralph Yarro, so some oversight as to just what "ordinary course of business" means to SCO when it comes to severance and such might not seem too extreme, particularly when the motion to pay them includes this information:

WHile the Severance Policy outlines the general parameters of the severance that an employee is eligible for, the Debtors' Board of Directors ultimately approves the amount of severance to be paid to a terminated employee.

I put it in red, to symbolize a red flag. As I read this, it's saying that SCO Group could terminate, say Chris Sontag or Darl McBride, and award them zillions of dollars as a bonus, but sealed so no one knows but the Trustee, who is unlikely to be altogether familiar with this long, sad SCO story or even what is normal in the industry. The Severance Policy says that you can get severance up to a full year, if you are on the Executive VP level, for example. Darl gets paid rather a lot of money, from my standpoint. If the company was run into the ground, if he is terminated, should he get a year's salary and bonuses? If you are Novell or the other creditors, you might not say yes. That seems like a very large blank check to me, so much so that it might explain the over-the-top allegations about "threats" and "poaching". They have to justify it somehow. The deadline to object is October 22nd. This is a speeded up process requested by SCO and already ordered (also order to shorten time on sealing motion) by the judge. The other new matters are:

  • American Express wants all notices;
  • Epiq has filed a Supplemental Affidavit/Declaration of Service RE Notice of Commencement of Chapter 11 Bankruptcy Cases, Meeting of Creditors and Fixing of Certain Dates - it forgot to type on the envelopes that legal documents were inside, so it redid all the notices

Here's the latest in the docket history:

116 - Filed & Entered: 10/12/2007
Motion to Authorize (B)
Docket Text: Motion to Authorize to (I) Continue Prepetition Severance Policy Applicable to All Employees and (II) Pay Severance and Accured Benefits to Employees Terminated Postpetition Filed by The SCO Group, Inc.. (Attachments: # (1) Proposed Form of Order) (O'Neill, James)

117 - Filed & Entered: 10/12/2007
Terminated: 10/15/2007
Motion to Shorten Time (B)
Docket Text: Motion to Shorten Time on Debtors' Motion for Authorization to (I) Continue Prepetition Severance Policy Applicable to All Employees and (II) Pay Severance and Accrued Benefits to Employees Terminated Postpetition and to Fix a Hearing Date [Requested Hearing Date: 10/25/07 @ 4:00 p.m at USBC, 824 Market Street, 6th Fl., Courtroom #3][Requested Objection Deadline: 10/22/07 at 4:00 P.M.] (related document(s)[116] ) Filed by The SCO Group, Inc.. (Attachments: # (1) Proposed Form of Order) (O'Neill, James)

118 - Filed & Entered: 10/12/2007
Motion to Seal
Docket Text: Motion to Seal (RE: related document(s)[116] Motion to Authorize (B), Motion to Authorize (B)). Documents and Data Subject to Debtors' Motion for Authorization to (I) Continue Prepetition Severance Policy Applicable to All Employees and (II) Pay Severance and Accrued Benefits to Employees Terminated Postpetition [Hearing: 10/25/07 @ 4:00 P.M. at USBC, 824 Market Street, 6th Fl., Courtroom #3][Objection Deadline: 10/22/07 @ 4:00 P.M.] Filed by The SCO Group, Inc.. (Attachments: # (1) Proposed Form of Order) (O'Neill, James)

119 - Filed & Entered: 10/12/2007
Terminated: 10/15/2007
Motion to Shorten Time (B)
Docket Text: Motion to Shorten Time on Debtors' Motion to File Under Seal Documents and Data Subject to Debtors' Motion for Authorization to (I) Continue Prepetition Severance Policy Applicable to All Employees and (II) Pay Severance and Accrued Benefits to Employees Terminated Postpetition and to Fix a Hearing Date (related document(s)[118] ) Filed by The SCO Group, Inc.. Hearing scheduled for 10/25/2007 at 04:00 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 10/22/2007. (Attachments: # (1) Proposed Form of Order) (O'Neill, James)

120 - Filed & Entered: 10/15/2007
Certificate of Service
Docket Text: Certificate of Service Regarding Debtors' Motion for Authorization to (I) Continue Prepetition Severance Policy Applicable to all Employees and (II) Pay Severance and Accrued Benefits to Employees Terminated Postpetition (related document(s)[116] ) Filed by The SCO Group, Inc.. (O'Neill, James)

121 - Filed & Entered: 10/15/2007
Certificate of Service
Docket Text: Certificate of Service re: Motion to Shorten Time on Debtors' Motion for Authorization to (I) Continue Prepetition Severance Policy Applicable to All Employees and (II) Pay Severance and Accrued Benefits to Employees Terminated Postpetition and to Fix a Hearing Date (related document(s)[117] ) Filed by The SCO Group, Inc.. (O'Neill, James)

122 - Filed & Entered: 10/15/2007
Certificate of Service
Docket Text: Certificate of Service re: Motion to Seal (RE: related document(s)[116] Motion to Authorize (B), Motion to Authorize (B)). Documents and Data Subject to Debtors' Motion for Authorization to (I) Continue Prepetition Severance Policy Applicable to All Employees and (II) Pay Severance and Accrued Benefits to Employees Terminated Postpetition (related document(s)[118] ) Filed by The SCO Group, Inc.. (O'Neill, James)

123 - Filed & Entered: 10/15/2007
Certificate of Service
Docket Text: Certificate of Service re: Motion to Shorten Time on Debtors' Motion to File Under Seal Documents and Data Subject to Debtors' Motion for Authorization to (I) Continue Prepetition Severance Policy Applicable to All Employees and (II) Pay Severance and Accrued Benefits to Employees Terminated Postpetition and to Fix a Hearing Date (related document(s)[119] ) Filed by The SCO Group, Inc.. (O'Neill, James)

124 - Filed & Entered: 10/15/2007
Affidavit/Declaration of Service
Docket Text: Supplemental Affidavit/Declaration of Service by Epiq Bankruptcy Solutions, LLC, Regarding Notice of Commencement of Chapter 11 Bankruptcy Cases, Meeting of Creditors and Fixing of Certain Dates (related document(s)[64], [65] ) Filed by The SCO Group, Inc.. (Attachments: # (1) Exhibit A) (Werkheiser, Rachel)

125 - Filed & Entered: 10/15/2007
Order on Motion to Shorten Time
Docket Text: Order Fixing Hearing and Shortening Notice on Debtors' Motion for Authorization to (I) Continue Prepetition Severance Policy Applicable to All Employees and (II) Pay Severance and Accrued Benefits to Employees Terminated Postpetition (Related Doc # [116], [117]) Order Signed on 10/15/2007. (LJS, )

126 - Filed & Entered: 10/15/2007
Order on Motion to Shorten Time
Docket Text: Order Fixing Hearing and Shortening Notice on Debtors' Motion to File Under Seal Documents and Data Subject to Debtors' Motion for Authorization to (I) Continue Prepetition Severance Policy Applicable to All Employees and (II) Pay Severance and Accrued Benefits to Employees Terminated Postpetition(Related Doc # [118], [119]) Order Signed on 10/15/2007. (LJS, )

127 - Filed & Entered: 10/15/2007
Notice of Appearance
Docket Text: Notice of Appearance and Request for Service of Notices American Express Travel Related Svcs Co Inc Corp Card c/o Becket and Lee LLP POB 3001 Malvern PA 19355-0701 Filed by American Express Travel Related Svcs Co Inc Corp Card.. (Weisman, Gilbert)


  View Printable Version


Groklaw © Copyright 2003-2013 Pamela Jones.
All trademarks and copyrights on this page are owned by their respective owners.
Comments are owned by the individual posters.

PJ's articles are licensed under a Creative Commons License. ( Details )