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To read comments to this article, go here
SCO's Postpetition Liabilities = $6 Million+ -- Tanner's Bills & SCO's Operating Reports
Tuesday, December 25 2007 @ 04:09 PM EST

More bankruptcy filings from the 21st of December, including two bills from the accountants, Tanner LC, and SCO's most recent operating reports for SCO Group and SCO Operations.

Could you spreadsheet gurus take a look? I'm not so sure they have any dollars in the bank any more that aren't already spoken for. SCO seems to my inexpert eyes to be saying they have $4 million left in unrestricted cash and another $2 million restricted. But on pages 11, of SCO Operations' Report [PDF], I see SCO listing $6,602,271 as Total Postpetition Liabilities and page 13 lists them as unpaid. There's a little over $2 million in pre-petition liabilities also. (The same page lists $13 million or so in current assets, but that's counting things like furniture.)

So, does that mean they've managed to pretty much blow it all just on the eve of the resumption of the Utah litigation? That's quite an achievement. Of course, they had quite a bit of help.

Wait, so ... what can Novell possibly get from the Utah court? SCO's furniture? Actually, if the res of any constructive trust is restricted, as SCO hopes, to the exact dollars Sun Microsystems and Microsoft paid for their licenses in 2003, might SCO now argue that every last farthing is gone? Poof. Well, I declare. Genius.

Here's a clue. Tanner has entries like this one on Exhibit A [PDF] to the 1st Interim Application [PDF]:

Tracing - Audit - SEC - SEC Audit - George - 10/26/2007 - 6.0 - $840.00

This isn't the regular SEC filing preparations, because there is a separate category for that, SEC Reviews listed under the category of Accounting, not Audit. No, this is tracing for the Novell litigation as the Application explains:

B. Tracing Analysis

14. During the Application Period, Tanner also assisted the Debtors' with respect to tracing cash receipts from Sun Microsystems and Microsoft to support the Debtors' litigation against Novell, Inc. relating to SVRX royalties that are part of the dispute between the parties. Fees: $7,000; Hours: 50

So that's how SCO has been using the time it gained from the automatic stay, working to prove that the dollars they have in hand now are not the same dollars they got from Sun Microsystems and Microsoft in 2003. Well, I guess I should say the dollars they don't have in hand.

Tanner isn't asking for half a million dollars, like Mesirow Financial Consulting. The fees are actually under the cap allowed, and in fact Tanner believes its rates for this are below market rates, and in the Second Interim Application, it tells the court it isn't charging for faxes or in-house copying. Then again, they already know about the Total Postpetition Liabilities figure. Accountants know better than most that one can't get blood from a stone.

The filings:

282 - Filed & Entered: 12/21/2007
Operating Report
Docket Text: Debtor-In-Possession Monthly Operating Report for Filing Period November 2007 for The SCO Group, Inc. Filed by The SCO Group, Inc.. (Attachments: # (1) Affidavit of Service and Service List) (Werkheiser, Rachel)

283 - Filed & Entered: 12/21/2007
Operating Report
Docket Text: Debtor-In-Possession Monthly Operating Report for Filing Period November 2007 for SCO Operations, Inc. Filed by The SCO Group, Inc.. (Attachments: # (1) Affidavit of Service and Service List) (Werkheiser, Rachel)

284 - Filed & Entered: 12/21/2007
Affidavit/Declaration of Service
Docket Text: Affidavit/Declaration of Service of Certificate of No Objection Regarding First Interim Application of Dorsey & Whitney LLP (related document(s)[238] ) Filed by Dorsey & Whitney LLP. (Schnabel, Eric)

285 - Filed & Entered: 12/21/2007
Application for Compensation
Docket Text: First Application for Compensation for Services and Reimbursement of Expenses as Accountants to the Debtors for the Period from October 5, 2007 through November 5, 2007 Filed by Tanner LC. Objections due by 1/10/2008. (Attachments: # (1) Notice # (2) Exhibit A # (3) Certificate of Service and Service List) (Jones, Laura Davis)

286 - Filed & Entered: 12/21/2007
Application for Compensation
Docket Text: Interim Application for Compensation [Second] for Services and Reimbursement of Expenses, as Accountants to the Debtors for the Period from November 6, 2007 through December 5, 2007 Filed by Tanner LC. Objections due by 1/10/2008. (Attachments: # (1) Notice # (2) Exhibit A # (3) Certificate of Service and Service List) (Jones, Laura Davis)

If you look at SCO Operations' Report, by the way, you see Kevin McBride was paid for the period 9/15/07 to 9/30/07 the sum of $3,860. I see nothing for him after that.

On the last page, there's an interesting footnote regarding an entry of $1,144,640:

(1) Adjustment to allocate legal expenses surrounding the IBM and Novell litigation to Cost of Goods Sold at Fiscal Quarter Closes (October, January, April & July)

That is where so much of the money went, of course, to the law firms. I wonder if Novell will try to get them to cough some of that back up again?


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