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To read comments to this article, go here
Novell expresses "concerns" about Mesirow's bill - and more bills flood in
Wednesday, January 09 2008 @ 07:46 PM EST

Novell has filed a Statement [PDF] expressing concerns about the cool half million that Mesirow Financials has submitted a bill for. It would like to express its concern over SCO's "astonishing" level of spending:
2. As a substantial creditor and party-in-interest, Novell is concerned by the astonishing level of fees and expenses generated at the Debtors' behest, given the lack of progress in these chapter 11 cases.

Novell details its concern regarding the Mesirow bill: it spent over 600 hours and in excess of $250,000 on analysis of a deal "for which no definitive value has been realized." He means the now dormant, withdrawn and maybe totally dead York deal, the one the York lawyer and SCO told the court had to be done by the end of December or it was off. Since the motion asking to do the deal was withdrawn, Novell thinks half a million "may be excessive." Hunh. You think?

And here come more bills from more professionals just doing what they do in the ordinary course for a fee, or so they represent to the court. There's an Affidavit [PDF] from Jackson Hole Advisors, for example, telling the court that its usual fee is $2,650. Um, would that be per year, per month, per day, per hour, or per minute? They fail to say, which leaves the door to the remaining, though rapidly diminishing, SCO monies nicely wide open, I'd say. Novell, of course, views it as its money SCO is squandering.

Novell expresses concern about appropriateness of the activities, too, on top of its worries about amounts. Mesirow spent over 350 hours and $100,000 on court filings. That's not even counting the York deal. Might that be duplicative of what the SCO lawyers are doing? SCO only has, what is it now, four law firms? Mesirow is a financial advisor. Further, Novell believes it might be worthwhile to "inquire whether Mesirow should be doing certain subsets of this work at all." Novell points out that some tasks may be "overstaffed." This appears to be draining the estate. And why might that be? Novell has an idea.

Here's how it delicately phrases it to the court:

4. As these few examples demonstrate, moreover, it appears that a major reason for the massive accumulation in fees so quickly in the case is that the Debtors themselves are employing their professionals on unrealistic tasks that are both inappropriate and inefficient to the estates, as well as failing to responsibly manage the professionals.

5. In sum, Novell is troubled by the lack of progress in these chapter 11 cases when compared to the remarkably high expenditure of fees and expenses by the Debtors' professionals. Given that the Debtors' financial resources are thin, at best, this issue is especially significant. Indeed, at this rate, without a miracle there will soon be nothing left for prepetition creditors.

Novell ends by reserving its right to object to the amount on final application to the court, as well as to any future bills, and it expressed its concerns also, it says, "with the intent of inducing the Debtors and their professionals to be more thoughtful about their activities and the attendant costs to the estates." Like *they* care.

Novell knows they don't care, probably suspects by now this may be a hustle and that the spending is deliberate, so why even file this? Because Novell is building a record and educating the judge as to precisely what type of picture is before him. It ain't over 'til it's over. This bill discussion is by no means over. Don't forget that on top of the bill Mesirow submitted, it warned it wasn't all-inclusive, due to bookkeeping practices, and more bills could be expected.

I suspect too Novell is getting into position to try to shove SCO into Chapter 7 if only to staunch the money bleed and to get someone else at the helm running the SCO show. At least, that's what I'd be trying to do. And Novell hopes some of the bills going forward will at least be less flagrantly excessive, even if only out of fear. If not, it's in position now to object more effectively. But in the beginning of every case, the court is inclined to give parties the benefit of the doubt.

I guess as a general rule of thumb, you could say that courts really aren't set up to handle hustlers early in the process. But they usually get there. Not calling anyone a hustler, you understand. Just talking in general terms here. I believe you can reach your own conclusions, and if anything in the world can help you do it, I'd say it's these bills.

The filings:

295 - Filed & Entered: 01/07/2008
Application for Compensation
Docket Text: Monthly Application for Compensation (Second) and Reimbursement of Expenses, as Co-Counsel to the Debtors and Debtors in Possession, for the Period from October 1, 2007 through October 31, 2007 Filed by Pachulski Stang Ziehl & Jones LLP. Objections due by 1/28/2008. (Attachments: # (1) Notice # (2) Exhibit A# (3) Certificate of Service and Service List) (Werkheiser, Rachel)

296 - Filed & Entered: 01/08/2008
Affidavit
Docket Text: Affidavit of Ordinary Course Professional Jackson Hole Advisors Filed by The SCO Group, Inc.. (Attachments: # (1) Affidavit of Service and Service List) (Werkheiser, Rachel)

297 - Filed & Entered: 01/08/2008
Minute Entry
Docket Text: Minutes of Hearing held on: 01/08/2008
Subject: OMNIBUS HEARING. (vCal Hearing ID (57217)). (related document(s) [293]) (SS, ) Additional attachment(s) added on 1/8/2008 (SS, ).

298 - Filed & Entered: 01/08/2008
Order on Motion to Amend
Docket Text: Order (I)Amending Employee Wage Order To Increase Certain Caps And (II)Authorize the Payment of The Amended Amounts To Certain Employees (Related Doc # [279]) Order Signed on 1/7/2008. (JSJ, )

299 - Filed & Entered: 01/08/2008
Order
Docket Text: Order Approving Assumption of Nonresidential Real Property Leases With GRE Mountain Heights Property LLC and Canopy Properties, Inc. (related document(s)[278] ) Order Signed on 1/8/2008. (LCN, )

300 - Filed & Entered: 01/08/2008
Application for Compensation
Docket Text: Monthly Application for Compensation (Third) for Services and Reimbursement of Expenses as Accountants to the Debtors for the Period from December 6, 2007 through January 4, 2008 Filed by Tanner LC. Objections due by 1/28/2008. (Attachments: # (1) Notice # (2) Exhibit A # (3) Certificate of Service and Service List) (Werkheiser, Rachel)

301 - Filed & Entered: 01/08/2008
Affidavit/Declaration of Service
Docket Text: Affidavit/Declaration of Service (and Service List) Regarding [Signed] Order (I) Amending Employee Wage Order to Increase Certain Caps and (II) Authorize the Payment of the Amended Amounts to Certain Employees (related document(s)[298] ) Filed by The SCO Group, Inc.. (Werkheiser, Rachel)

302 - Filed & Entered: 01/08/2008
Affidavit/Declaration of Service
Docket Text: Affidavit/Declaration of Service (and Service List) Regarding [Signed] Order Approving Assumption of Nonresidential Real Property Leases with GRE Mountain Heights Property LLC and Canopy Properties, Inc. (related document(s)[299] ) Filed by The SCO Group, Inc.. (Werkheiser, Rachel)

303 - Filed & Entered: 01/09/2008
Statement (B)
Docket Text: Statement Regarding First Monthly Application of Mesirow Financial Consulting, LLC for Compensation and Reimbursement of Expenses as Financial Advisors to the Debtors for the Period from September 14, 2007 through November 30, 2007 (related document(s)[280] ) Filed by Novell, Inc. (Attachments: # (1) Certificate of Service) (Simon, Christopher)


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