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Thakker & Thakker File an Affidavit - Updated
Tuesday, December 04 2007 @ 04:58 PM EST

There are only three small filings today in the SCO bankruptcy, so far anyway. [Update already: Another just showed up, a Declaration [PDF] in support of the CFO temp agency's application, with a huge 40-page Exhibit A [PDF]. I haven't read it yet, so we'll do it together.]

Novell's lawyers have filed their affidavit of service [PDF] of the Notice of the unexpected client duality, and you'll see that unlike typical affidavits of service, this one is going to all the lawyers, not the creditors.

And Thakker & Thacker, a firm in Mumbai, India, has filed an Affidavit of Ordinary Course Professional [PDF]. It's always so interesting to see how other places do the things we do in the US. Each page is stamped and notarized and proof of payment of 50 rupees appears on every page. It's just different than what I'm used to in the US, but its purpose is identical.

So who are Thakker & Thakker? They are lawyers for SCO, and were prior to the bankruptcy filing. The firm's affidavit mentions that is has "conflicts checks" database, which is the topic of the week, and it has checked and what the firm has done is help SCO with "India entry" and litigation.

The last paragraph is interesting:

10. I understand that any compensation paid to the Firm is subject to disallowances and/or disgorgement under 11 U.S.C. § 328(c).

OK. What's that?

Section 328 is entitled Limitation on compensation of professional persons:

(a) The trustee, or a committee appointed under section 1102 of this title, with the court’s approval, may employ or authorize the employment of a professional person under section 327 or 1103 of this title, as the case may be, on any reasonable terms and conditions of employment, including on a retainer, on an hourly basis, on a fixed or percentage fee basis, or on a contingent fee basis. Notwithstanding such terms and conditions, the court may allow compensation different from the compensation provided under such terms and conditions after the conclusion of such employment, if such terms and conditions prove to have been improvident in light of developments not capable of being anticipated at the time of the fixing of such terms and conditions.

(b) If the court has authorized a trustee to serve as an attorney or accountant for the estate under section 327 (d) of this title, the court may allow compensation for the trustee’s services as such attorney or accountant only to the extent that the trustee performed services as attorney or accountant for the estate and not for performance of any of the trustee’s duties that are generally performed by a trustee without the assistance of an attorney or accountant for the estate.

(c) Except as provided in section 327 (c), 327 (e), or 1107 (b) of this title, the court may deny allowance of compensation for services and reimbursement of expenses of a professional person employed under section 327 or 1103 of this title if, at any time during such professional person’s employment under section 327 or 1103 of this title, such professional person is not a disinterested person, or represents or holds an interest adverse to the interest of the estate with respect to the matter on which such professional person is employed.

That helps me understand much better the speed with which the court approved the professionals being paid. It's not like it can't swing back by and look at it again down the road.

And what litigation are we talking about here? If you look on our SCO Financials page, you'll find that in SCO's most recent 10Q, it talked about some litigation in India:

Other Matters

In April 2003, the Company’s former Indian distributor filed a claim in India, requesting summary judgment for payment of approximately $1,428,000, and an order that the Company trade in India only through the distributor and/or give a security deposit until the claim is paid. The distributor claims that the Company is responsible to repurchase certain software products and to reimburse the distributor for certain other operating costs. Management does not believe that the Company is responsible to reimburse the distributor for any operating costs and also believes that the return rights related to any remaining inventory have lapsed. The distributor additionally requested that the Indian courts grant interim relief in the form of attachment of local assets. These requests for interim relief have failed in the court, discovery has commenced, and hearings on the main claims have been held and are ongoing. The Company intends to vigorously defend this action.

Pursuit and defense of the above-mentioned matters will be costly, and management expects the costs for legal fees and related expenses will be substantial.

So this firm may be working on that litigation, but that isn't the only legal issue in India, as the 10Q goes on to explain:

During the three months ended April 30, 2004, our Indian office was assessed withholding taxes by the Government of India Income Tax Department. The Tax Department assessed a 15% withholding tax on certain revenue transactions in India that the Tax Department deemed royalty revenue under the Income Tax Act. We have filed an appeal with the Tax Department and believe that revenue from our packaged software does not qualify for royalty treatment and therefore would not be subject to withholding tax. However, we may be unsuccessful in our appeal against the Tax Department and be obligated to pay the assessed taxable amounts. Because of our international operations, we may be subject to additional withholding or other taxes from other international jurisdictions.
Both matters have appeared in SCO's SEC filings for years, as you can verify by comparing this 10Q with one a couple of years ago. SCO isn't setting aside any money to pay any such claims, I gather, so I'm not sure what, if anything, the Indian distributor wins, even if he should prove successful in court.

Today's filings:

246 - Filed & Entered: 12/04/2007
Affidavit
Docket Text: Affidavit of Ordinary Course Professional Thakker & Thakker Filed by The SCO Group, Inc.. (Attachments: # (1) Affidavit of Service and Service List) (Werkheiser, Rachel)

247 - Filed & Entered: 12/04/2007
Affidavit/Declaration of Service
Docket Text: Affidavit/Declaration of Service of Kimberly A. Beck re: Docket No. [234] - Novell's Limited Objection to Motion for Approval of Compromise of Incipient Controversy Regarding Cattleback Intellectual Property Holdings, Inc. (related document(s)[234] ) Filed by Novell, Inc.. (Nestor, Michael)

248 - Filed & Entered: 12/04/2007
Affidavit/Declaration of Service
Docket Text: Affidavit/Declaration of Service of Kimberly A. Beck re: Docket No. [243] - Notice Regarding Novell's Limited Objection to Motion for Approval of Compromise of Incipient Controversy Regarding Cattleback Intellectual Property Holdings, Inc. (related document(s)[243] ) Filed by Novell, Inc.. (Nestor, Michael)

249 - Filed & Entered: 12/04/2007
Declaration in Support
Docket Text: Declaration in Support Declaration of Kent L. Thomas in Support of Debtors' Motion for Approval of Employment of CFO Solutions to Furnish Chief Financial Officer to the Debtors (related document(s)[139] ) Filed by The SCO Group, Inc.. (Attachments: # (1) Exhibit A # (2) Certificate of Service and Service List) (Werkheiser, Rachel)


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