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To read comments to this article, go here
Now the US Trustee Objects to the Patent Sale Too
Friday, November 30 2007 @ 02:01 AM EST

SCO doesn't seem to be fully applying themselves lately. Perhaps they are a bit distracted. You'd think they'd at least *try* to do their paperwork correctly. Maybe they figure, why bother? It's over. We're under a death sentence. York's lawyer said so. So since tomorrow we die, let's eat and drink and be merry. That, at least, is rational.

So that can't be it.

Whatever is the reason for these crazy SCO filings, the US Trustee has now filed another objection [PDF], this one to the proposed patent sale too. It must be hard to be a SCO lawyer. All the other lawyers in the office must tease them mercilessly. Even the paras are giggling, I'm guessing, as they type up yet another strange motion. Giggling or sending earnest memos to their bosses: "The software is prompting for the name of the proposed buyer, and I don't seem to have it. Should I contact the client? We can't submit it like this. We are missing the following necessary items..."

The trustee also would like a little bit more information, the same complaint Novell has, not enough specificity. As you know, SCO got a D minus in that subject in college in Utah in the IBM case, and now that they are trying for their masters in bankruptcy in Delaware, they still struggle with it. Maybe if they had a One Laptop Per Child laptop, they could focus better. Anyway, the Trustee has noticed the problem too and suggests the following:

The U.S. Trustee submits that the Debtors must better explain the adequacy of the sale process before this Court can fully evaluate the relief requested.

Like they can. And what's with the bonuses, the objection asks? Who gets those? Why? What are the terms? For that matter, where is the engagement agreement between Ocean Tomo and The SCO Group? Maybe 363 Group can fax it right over. Joke. Joke. Technically, SCO could just provide all the information everyone is asking for, but if they wanted to do that, or could, they would have already, I expect.

Their lawyers have to know it's not likely that a deal will be approved where no one knows who is buying what, there's no paperwork attached, no clear information about the worth of the patent, no specifics on how it was marketed, and to top it all off, here's what else the US Trustee has noticed, in the footnote:

The U.S. Trustee notes that The SCO Group, Inc. is party to the retention agreement with Ocean Tomo not Cattleback. The U.S. Trustee is unaware of any application by the Debtors to employ Ocean Tomo as a professional under 11 U.S.C. 327(a).

Uh oh. That's an oops, for real. See what I mean? They just aren't trying. Wait until Mr. McMahon finds out Ocean Tomo and The 363 Group appear to be joined at the hip, yet are bidding against one another, or acting like it.

So why isn't SCO being more careful? Their lawyers are really competent. So that's not the problem. It's almost like someone is holding a gun to their heads and forcing them to file this absolutely loopy stuff that no one can possibly believe will be approved. Here's the docket entry:

11/29/2007 - 236 - Objection to Debtors' Motion for Approval of Incipient Controversy (related document(s)194 ) Filed by United States Trustee (Attachments: # 1 Certificate of Service) (McMahon Jr., Joseph) (Entered: 11/29/2007)

I guess there is one other possibility. Do you remember how Boies Schiller in the SCO v. IBM litigation used to ask for the sun and the moon and the stars in US District Court in Utah, when all they really wanted was one star? And by asking for outrageous things and fighting for them tooth and nail, they'd lose, be denied the sun and the moon and all of the stars but one, and there they'd be, holding one twinkling star. Ah, the goode olde dayes, when SCO was merely outrageous.

Anyway, Mr. McMahon says he reserves the right to amend this objection when more crazy stuff spills out from SCO, either before or during the hearing on December 5. He doesn't put it quite like that:

The U.S. Trustee reserves the right to amend and/or supplement this objection at or prior to the hearing on the Motion.

My translation: "What in the world will they try next? I'm keeping my options open, so when they provide the details I can run to the podium and object some more." What is this? His sixth objection? Tenth? Anyone counting? The hearing should have a certain Buster Keaton quality to it, with SCO as Keaton in that scene where the he opens the door to a house and walks in, closes the door behind him, and then the entire house falls down all around him. I've read that Keaton had to stand on the precise spot, marked by a nail, or the house would have crushed him to death. Fearless. Like these Utah cowpokes, who are boldly spinning some mighty strange yarns in Delaware.

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

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re

THE SCO GROUP, INC., et al.,

Debtors.
Chapter 11

Case Number 07-11337 (KG)
(Jointly Administered)

Hearing Date: December 5, 2007 at 10:00 a.m.

OBJECTION OF THE UNITED STATES TRUSTEE TO THE
DEBTORS' MOTION FOR APPROVAL OF INCIPIENT CONTROVERSY
(DOCKET ENTRY # 194)

In support of her objection to the Debtors' motion for approval of incipient controversy (the "Motion"), Kelly Beaudin Stapleton, United States Trustee for Region 3 ("U.S. Trustee"), by and through her counsel, avers:

INTRODUCTION

1. Under (i)28 U.S.C. 1334, (ii) (an) applicable order(s) of the United States District Court for the District of Delaware issued pursuant to 28 U.S.C. 157(a), and (iii) 28 U.S.C. 157(b)(2), this Court has jurisdiction to hear and determine the Motion.

2. Under 28 U.S.C. 586, the U.S. Trustee has an overarching responsibility to enforce the laws as written by Congress and interpreted by the courts. See United States Trustee v. Columbia Gas Sys., Inc. (In re Columbia Gas Sys., Inc.), 33 F.3d 294, 295-96 (3d Cir. 1994) (noting that U.S. Trustee has "public interest standing" under 11 U.S.C. 307 which goes beyond mere pecuniary interest); Morgenstern v. Revco D.S., Inc. (In re Revco D.S., Inc.), 898 F.2d 498, 500 (6th Cir. 1990) (describing the U.S. Trustee as a "watchdog").

1

3. Under 11 U.S.C. 307, the U.S. Trustee has standing to be heard on the Motion and the issues raised in this objection.

4. The U.S. Trustee objects to the Motion on the grounds identified below.

5. In addressing whether the proposed settlement should be approved, this Court should consider whether the Debtors' estates are receiving fair value in exchange for the release of fraudulent transfer liability. The "fair value" analysis hinges upon, among other factors, an understanding of the intellectual property being sold and whether the process employed by the Debtor/Cattleback Intellectual Property Holdings, Inc. ("Cattleback") was designed to elicit the highest and best offer for the patent. In the Motion, the Debtors provide the title of the patent and, in three abbreviated sentences, describe the marketing and sale process (see Mot. 9 - 11). The U.S. Trustee submits that the Debtors must better explain the adequacy of the sale process before this Court can fully evaluate the relief requested.

6. The engagement agreement between Ocean Tomo, LLC and The SCO Group, Inc. was not appended to the Motion.1 Similarly, while the Debtors indicate that Cattleback is obligated to pay $45,000 in bonuses to (i) the inventor of the patent and (ii) certain SCO employees, neither the terms under which the bonuses are payable nor the persons to whom the bonuses are payable are disclosed in the Motion. Again, in order to evaluate the relief requested by the Debtors in the Motion, the aforementioned information should be disclosed.

7. The U.S. Trustee reserves the right to amend and/or supplement this objection at or prior to the hearing on the Motion.

2

Respectfully submitted,

KELLY BEAUDIN STAPLETON
UNITED STATES TRUSTEE

BY: /s/ Joseph J. McMahon, Jr.
Joseph J. McMahon, Jr., Esquire (# 4819)
Trial Attorney
United States Department of Justice
Office of the United States Trustee
[address, phone, fax]

Date: November 29, 2007

3

1 The U.S. Trustee notes that The SCO Group, Inc. is party to the retention agreement with Ocean Tomo not Cattleback. The U.S. Trustee is unaware of any application by the Debtors to employ Ocean Tomo as a professional under 11 U.S.C. 327(a).


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