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Now They Tell Us - Today's Bankruptcy Hearing Cancelled - Updated 2Xs - #161-165
Thursday, October 25 2007 @ 04:05 PM EDT

I hope none of you got caught up in this and lost time from work for nothing, because the hearing for today was cancelled when SCO and the Trustee resolved his objections:
162 - Filed & Entered: 10/25/2007
Hearing Cancelled. Notice of Agenda of Matters Scheduled for Hearing. Docket Text: HEARING CANCELLED. Amended Notice of Agenda of Matters Scheduled for Hearing. (related document(s)[148] ) 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. (Attachments: # (1) Certificate of Service and Service List) (Werkheiser, Rachel)

The trouble is that we are not creditors or shareholders here, not that that's a bad thing otherwise, so I don't get notices by fax, which is what happened to those on the list, as you can see on the Certificate of Service. So always call the court before you leave, so you don't make a trip for nothing.

Update: And here's the rest:

161 - Filed & Entered: 10/25/2007
Certification of Counsel
Docket Text: Certification of Counsel Regarding the (A) Order Authorizing the Debtors to (I) Pay Severance and Accrued Benefits to Terminated Employees and (II) Continue Severance Policy; and (B) Order Granting Debtors' Motion to File Under Seal Documents and Data Subject of 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], [118] ) Filed by The SCO Group, Inc.. (Attachments: # (1) Exhibit A # (2) Exhibit B # (3) Exhibit C # (4) Exhibit D) (Werkheiser, Rachel)

163 - Filed & Entered: 10/25/2007
Application for Compensation
Docket Text: Interim Application for Compensation (First) for Services and Reimbursement of Expenses as Co-Counsel to the Debtors in Possession for the Period from September 14, 2007 through September 30, 2007 Filed by Berger Singerman, P.A.. Objections due by 11/14/2007. (Attachments: # (1) Notice # (2) Exhibit A # (3) Certificate of Service and Service List) (Werkheiser, Rachel)

As you can see from Exhibit A of 161, SCO did not get a blank check. Compare it with Exhibit B, the blackline version, and you'll see this phrase crossed out: "in their discretion". And Bert Young and Michael Olson are specifically exempted from getting what SCO wanted to give them. SCO can pay severance to the little people already terminated, but going forward it has to follow of procedure of letting everyone know the plan, so objections can be filed. That means SCO has to list the name of the employee being terminated, his or her title, how long the person has been with the company, and the termination date. No sealing. The notice also has to contain representations as to whether the employee was an officer or director under either of SCO's bylaws, whether he or she was terminated without cause, the proposed amount the person can claim for the pre-petition benefits based on length of service.

Next, SCO will have to tell the US Trustee the person's annual salary, the amount of severance SCO proposes to pay, and a list of amounts previously paid to nonmanagement employees during that calendar year.

Then after the Notice goes out to everyone, everyone waits for 15 days. If no objections are filed, SCO then files an Amended Schedule F, "which lists the Employee as having a general unsecured claim that is non-contingent, liquidated and undisputed in an amount equal to the pre-petition length of service portion of the Employee's benefits under the Severance Policy consistent with the limitations reflected on the 'Length of Service Grid' on Exhibit A (to the extent that Grid is applicable to such Employee)." If SCO wants to pay more than that, it has to file another motion, on notice to everyone so they can object.

On those already terminated, SCO can pay the pre-petition PTO in an amount up to $50,628.49.

I gather this means that the faucet is being shut down to a trickle. Pre-petition is one thing; but any future terminations are just added to the list of debtors' creditors, and they will have to wait until this whole tangled mess gets sorted out like everybody else. The US Trustee, I gather, isn't looking to fund any trips to Rio, so to speak, at Novell's or other creditors' expense. And he's making a distinction between insider management and the hoi polloi.

Now, Exhibits C and D, the latter being the blackline version, shows what happened with the sealing request. It got modified. Some things can be filed sealed, and some can't. The major change is on paragraph 3 on the last page, which now reads:

3. The Debtors are authorized to file a copy of their Severance Policy, as well as the names and amount of severance to be paid to each of the identified Terminated Employees (the "Confidential Information") under seal; provided, however, that the following information shall not be filed under seal and shall be deleted from documents containing the Confidential Information: (i) information relating to severance previously proposed to be paid to the Chief Financial Officer and Vice President, Finance; and (ii) all information relating to amounts proposed to be paid as time off.

So that didn't work out for those two. And the other filing of the day is a proposed bill from SCO's bankruptcy lawyer, one of them, Berger, Singerman, who tell the court they should be paid $65,331 for the time period from September 14 through September 30. Plus expenses of $2,526.40. They spent 7 hours on "fee application preparation" but that's not in this bill. That's next time. Lots of lawyers at the firm are pitching in, according to page 2, but Arthur Spector and Grace Robson are doing the bulk of the work as far as hours go. According to this sheet, the paralegals barely broke a sweat so far, less than 15 hours total. The lawyers say they spent around 166 hours so far, in the aggregate.

Given what I know about what lawyers do and what paralegals often do, I'd say that this gives us a picture of just how complex SCO's situation is. It's not just a matter of filling in some forms. We're looking at hefty bills for legal research and strategy planning. And sure enough, on page 3, you'll see that my instinct is correct. Most of the hours are in the box marked "Litigation Consulting" and "Case Administration" with "Relief from Stay/Adequate Protection" coming in third. And in the table below, Expense Summary, you see the winner of most total expense is "Computerized Research (Lexis, Westlaw and PACER charges)". Next biggest expense is travel. It's up to the court, but if anyone wanted my opinion, I'd say they are worth every penny they are asking for. They earned the money the old fashioned way -- they worked hard for it.

Update 2: And now the Orders have been signed:

164 - Filed & Entered: 10/26/2007
Order
Exhibit A) (LCN, )

165 - Filed & Entered: 10/26/2007
Order
Docket Text: Order Authorizing the Debtors to (I) Pay Severance and Acrued Benefits to Terminated Employees and (II) Continue Severance Policy. (related document(s)[116] ) Order Signed on 10/25/2007. (Attachments: # (1) Exhibit A) (LCN, )

Exhibit A to 165 is a summary of the severance policy.

Also, I wanted to let you know, as I always do when I post a comment anywhere but Groklaw, that I posted a comment to Dave Shields' blog. We put an article of his on OLPC in News Picks, and he wrote a lovely article about Groklaw, and so I thanked him that way. Just so you know it's authentic.


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