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SCO Files a Ch. 11 Plan, a Disclosure Statement, and Wants to Pay York's Expenses
Saturday, March 01 2008 @ 03:53 PM EST

SCO has now filed its Chapter 11 Plan of Reorganization [Part 2, both PDFs], along with a Disclosure Statement [PDF]. The hearing is set for April 2. Also they have filed a Motion for Authority to Pay an Expense Reimbursement to York Capital Management [PDF]. SCO seems to be having a ball distributing all the money they can prior to the Utah trial in April. They are so bold. That's what makes them so fun to watch.

Here's why SCO wants to pay York. They have a *moral* duty, they feel. Did you ever expect 'SCO' and 'moral' to show up in the same sentence? I confess I did not. I think we can now say that we've seen everything:

4. SCO believes that as a business and moral matter SCO should make the $50,000 payment to York under the Term Sheet (which it did finalize) or the $150,000 payment to York under the terms of the Asset Purchase Agreement (which was virtually completed at the time SCO and York abandoned the transaction.

Don't you love it? Wait. Don't the executives have to do what's best for the everlovin' shareholders? And I thought York only got paid if the deal actually happened. Say, speaking of asset purchase agreements, Novell probably feels SCO has a business and moral obligation -- nay, a legal duty, forsooth -- to pay Novell for license fees SCO agreed to pay under an earlier APA that was actually signed in a deal that was actually finalized in all particulars.

If you wish to review the York deal particulars, here's the list:

Here are all the new filings:

365 - Filed & Entered: 02/27/2008
Order on Motion to Appear pro hac vice
Docket Text: Order Granting Motion for Admission pro hac vice of (Kim B. Andres, Esq.) (Related Doc # [363]) Order Signed on 2/27/2008. (JSJ, )

366 - Filed & Entered: 02/27/2008
Certificate of No Objection
Docket Text: Certificate of No Objection (No Order Required) Regarding Fourth Interim Application of Tanner LC for Compensation for Services and Reimbursement of Expenses as Accountants to the Debtors for the Period from January 5, 2008 through February 1, 2008 (related document(s)[321] ) Filed by The SCO Group, Inc.. (Attachments: # (1) Certificate of Service and Service List) (Werkheiser, Rachel)

367 - Filed & Entered: 02/29/2008
Motion to Authorize (B)
Docket Text: Motion to Authorize /Debtors' Motion for Authority to Pay an Expense Reimbursement to York Capital Management Filed by The SCO Group, Inc.. Hearing scheduled for 4/18/2008 at 01:30 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 4/11/2008. (Attachments: # (1) Notice # (2) Proposed Form of Order # (3) Certificate of Service and Service List) (O'Neill, James)

368 - Filed & Entered: 02/29/2008
Chapter 11 Plan
Docket Text: Chapter 11 Plan of Reorganization Debtors' Joint Plan of Reorganization Filed by The SCO Group, Inc. (Attachments: # (1) Exhibit A# (2) Certificate of Service and Service List) (Jones, Laura Davis)

369 - Filed & Entered: 02/29/2008
Disclosure Statement
Docket Text: Disclosure Statement in Connection with Debtors' Joint Plan of Reorganization (related document(s)[368] ) Filed by The SCO Group, Inc. (Attachments: # (1) Disclosure Statement - Part 2 # (2) Exhibits # (3) Certificate of Service and Service List) (Jones, Laura Davis)

370 - Filed & Entered: 02/29/2008
Notice of Hearing (B)
Docket Text: Notice of Hearing on Approval of Disclosure Statement in Connection with Debtors' Joint Plan of Reorganization (related document(s)[369] ) Filed by The SCO Group, Inc.. Hearing scheduled for 4/2/2008 at 02:00 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 3/26/2008. (Attachments: # (1) Certificate of Service and Service List) (Jones, Laura Davis)

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

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

________________________

In re:

The SCO GROUP, INC. et al., 1

Debtors.

_______________________

Chapter 11

Case No. 07-11337 (KG)
(Jointly Administered)

Hearing Date: April 18, 2008 at 1:30 p.m. Prevailing Eastern Time
Objection Deadline: April 11, 2008 at 4:00 p.m. Prevailing Eastern Time

DEBTORS' MOTION FOR AUTHORITY TO PAY AN
EXPENSE REIMBURSEMENT TO YORK CAPITAL MANAGEMENT

The SCO Group, Inc. and SCO Operations, Inc. (the "Debtors") request authority to pay York Capital Management ("York") up to $150,000. As grounds thereof, the Debtors state the following:

1. On October 23, 2007, the Debtors filed the Emergency Motion of the Debtors for an Order (A) Approving Asset Purchase Agreement, (B) Establishing Sale and Bidding Procedures, and (C) Approving the Form and Manner of Notice of Sale (D.E. No. 149), attaching a copy of a term sheet (the "Term Sheet") by and between The SCO Group, Inc. ("SCO") and York providing for, among other things, SCO to pay to York, subject to Court approval, up to $50,000 in reimbursable expenses to be incurred by York in connection with the transactions contemplated by the Term Sheet.

2. On November 16, 2007, the Debtors filed a Notice of Filing of Asset Purchase Agreement Between the Debtors and York Capital Management ("Asset Purchase

Agreement") (D.E. No. 215). Under the terms of the Asset Purchase Agreement, SCO was required to pay to York, subject to Court approval, up to $150,000 in reimbursable expenses to be incurred by York in connection with the transactions contemplated by the Asset Purchase Agreement.

3. Unfortunately, the negotiations between SCO and York did not reach a mutually satisfactory conclusion, the transaction failed, and the Court never entered an Order approving the transaction or any of the documents that contemplated the transaction.

4. SCO believes that as a business and moral matter SCO should make the $50,000 payment to York under the Term Sheet (which it did finalize) or the $150,000 payment to York under the terms of the Asset Purchase Agreement (which was virtually completed at the time SCO and York abandoned the transaction).

5. At previous hearings before this Court, counsel for SCO informed the Court that it had made the commitments referred to herein.

6. The Debtors recognize that, pursuant to 11 U.S.C. 363(b) payments such as the proposed payment to York, as payments outside the ordinary course of business, may be made, if at all, only with Court approval. Moreover, the Debtors understand that post-petition payments made outside the ordinary course of business and without prior Court approval are subject to being recovered pursuant to 11 U.S.C. 549.

7. The Debtors are concerned that obtaining potential investors or buyers might be made more difficult if all the risk of due diligence is borne by the investor or buyer. If SCO does not honor this commitment, future negotiations may be made more difficult.

8. Therefore, the Debtors now seek authority from this Court to make a payment to York under the terms of the now-abandoned Term Sheet and Asset Purchase Agreement. [remainder of page intentionally left blank)

WHEREFORE, the Debtor respectfully requests that this Court enter an order:

A. Granting the Debtors authority to pay to York up to $150,000, and

B. Granting such other and further relief as it deems just and proper.

Dated: February 29,2008

PACHULSKI STANG ZIEHL & JONES LLP

Laura Davis Jones (Bar No. 2436)
James E. O'Neill (Bar No. 4042)
Rachel Lowy Werkheiser (Bar No. 3753)
[address, phone, fax, email]

and

BERGER SINGERMAN, P.A.
Paul Steven Singerman
Arthur J. Spector
Grace E. Robson
[address, phone, fax]

and

[address, phone, fax, email]

Co-Counsel for the Debtors and Debtors-in-Possession

1The last four digits of the taxpayer identification number for The SCO Group, Inc. are 2823. The last four digits of the taxpayer identification number for SCO Operations, Inc. are 7393. The address for both Debtors is 355 South 520 West, Lindon, Utah 84042.

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