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Judge Gross Wakes Up: Order Re July 27th Hearing
Tuesday, July 21 2009 @ 04:58 PM EDT

Judge Kevin Gross, the judge handling the SCO bankruptcy, appears to have awakened with a start.He says IBM has informed him of issues related to the July 27th hearing on SCO's proposed sale of assets to unXis. I'll say.

He has issued an order that there will be a teleconference on July 22 with him and the parties, in advance of the hearing on the 27th, and he wants the discovery IBM has asked for produced by SCO by the end of the day on the 22nd, the day of the teleconference. He orders the deposition of Ryan Tibbits and William Broderick on the 23rd or they will not be allowed to testify on the 27th. And most significantly, he says he will not consider any testimony or documents on the alleged strength of SCO's litigation against IBM, Novell, Red Hat or AutoZone. Period. It's not his ball of wax.

The cluetrain seems to have arrived at the station. I surely hope, though, that some of you can attend that hearing, so we'll know in a timely way what happens. It will be like a mini-trial. With the new court rules holding back transcripts until weeks later, it's our only source of immediate information.

Here's the order:

07/21/2009 - 856 - Order Re: Hearing To Be Held On July 27, 2009. Order Signed on 7/21/2009. (BMT) (Entered: 07/21/2009)

Update:Groklaw member jbb highlights an important point:
Both the Novell and IBM objections hammered at the issue of "good faith" even though Novell did not force feed it to the judge. IMO IBM hit the crux of the issue with:
. .. disclosure is a fundamental requirement of good faith. A sale is not in good faith where "the relationship between the seller and the buyer has been concealed"...

Belated disclosure after the truth has been uncovered should not suffice to cure earlier non-disclosure. A debtor's response of disclosing only after being caught cannot constitute good faith.

I think, myself, that these two paragraphs in Novell's filing must have caught the judge's attention also, because it is, not matter how nicely put, a criticism of what happened at the last hearing:
8. Over the objections of IBM and Novell, the Court agreed to consider the PSA in connection with the Conversion Motions. The Court reached this result based upon its findingthat the Debtors were proceeding in good faith, a conclusion it reached in reliance on the Debtors' representations and some testimony from the Debtors. Given the lateness of the hour and the moving parties' clear disadvantage in trying to deal with the PSA on essentially no notice at all, the Court and parties adjourned the Conversion Motions to be heard with a motion by the Debtors for approval of the PSA on a schedule the parties were to agree upon. The parties thereafter agreed that the Debtors would file the sale motion by June 22, with oppositions due by July 20 after discovery, and a joint hearing on the sale motion and Conversion Motions on July 27.

9. In fact, the Debtors did not file the Third Sale Motion until late at night on June 22. (Dkt. 815.) Furthermore, they still did not attach the schedules or exhibits. Most of those came only on June 23rd even though the Debtors had represented to the Court on June 15 that the schedules and exhibits were ready, only awaiting completion of copying. (Dkt. 819.)3 Finally, a key exhibit, Exhibit A listing the executory contracts to be assumed and assigned (an exhibit that, like the others, supposedly was ready to go and final on June 15) was not filed until July 10, 18 days after the agreed-upon deadline and 25 days after the June 15 hearing, when the Debtors represented to this Court unequivocally that it was complete except for copying. (Dkt. Nos. 832, 833.) Even then, it took the Debtors yet another week and repeated inquiries by Novell before the Debtors could state positively whether the crucial Novell-Santa Cruz APA that is at the heart of the Litigation was to be assumed or not (it was not). (See Exhibit A hereto (email chain between counsel for the Debtors and Novell).)4 Since the Debtors had represented on June 15 that they had taken so long to make a deal because they had only just worked out the key issue of what assets they claimed under the APA that they would need to keep (see, e.g., 6/15 Tr. 4:4-41:5), it is puzzling why the Debtors had to were so unclear on that subject that they could not respond definitively to Novell's questions until July 17, more than a month later.

Here's the order as text:



In re:

The SCO GROUP, INC., et al.,

Chapter 11

Case No. 07-11337(KG)


International Business Machines Corporation by letter, dated July 21, 2009, from Richard Levin, Esquire (the "Letter"), has alerted the Court to issues concerning the Hearing on July 27, 2009. Given the few days remaining prior to the Hearing, the Court is issuing this Order in advance of the teleconference on July 22, 2009, at 9:00 a.m.

1. Discovery

a. Debtors shall produce by the close of business on July 22, 2009, all of the documents responsive to the categories the Letter identifies.

b. Debtors shall either make available for deposition on July 23, 2009 (afternoon) Ryan Tibbits and William Broderick, or will not be permitted to have them testify,

2. Hearing

a. The Court will not hear testimony or admit into evidence reports or affidavits/declarations addressing the merits of Debtors' claims against IBM, Novell, Red Hat and/or AutoZone. Any testimony or evidence on the strengths or weaknesses of the cases would inappropriately require the Court to make findings on the merits of the litigations without a full record.


b. The Court will allot 2,5 hours for each side (i.e. Debtors on one side, IBM and Novell on the other) and time for the Office of the United States Trustee, if needed, up to 30 minutes, Each side will have a total of 30 minutes to make an opening (if desired) and/or a closing argument and the Office of the United States Trustee will have 10 minutes. The Court urges the parties to consider and discuss the possibility of proffering direct testimony subject to cross examination of the witness.

c. The parties shall exchange Hearing exhibits as follows:

All parties: by noon on July 23, 2009

Objections: exchanged by 4:00 p.m. on July 24, 2009

3. The Court will conduct a teleconference on July 22, 2009, at 9:00 a.m.

SO ORDERED this 21stday of July, 2009

KEVIN GROSS, U.S.B.J. [Signature]


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