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SUSE's Reply, Cahn's Objection to Motion to Compel, and MORs, MORs, MORs - Updated 2Xs
Thursday, December 24 2009 @ 10:31 AM EST

Lots of bankruptcy filings, including a reply by SUSE in support of its motion for relief from the automatic stay and Chapter 11 Trustee Edward Cahn has filed an Objection to Al Petrofsky's motion to compel him to comply with reporting requirements. And Ocean Park Advisors has filed an Amended Exhibit A. But that isn't the big news. The big news is that SCO has filed its Monthly Operating Reports, or MORs, for July through September, 2009. But interestingly, they are filed with a disclaimer that they are filed "consistent with the format and allocations of liabilities as previously adopted by the Debtors," because Mr. Cahn and his financial advisors simply have not yet had time to "review all of the historical information previously reported by the Debtors", so Cahn reserves the right to amend them once he has done a more thorough review.

"Historically," the disclaimer continues, "the Company may not have distinguished between direct liabilities of debtor and non-debtor companies." That would be the foreign subsidiaries, I expect, like Japan and Germany. "The Trustee with its financial advisors is conducting a thorough analysis of the intercompany arrangement among the debtors and the non-debtor subsidiaries and reserves the right to modify these MORs upon completion of its review." It cautions the reader not to rely on the information, as they are filing just to fulfill reporting requirements. I would take it that SCO may have more in the way of assets than is reported here, then. September says $1,287,030. And we will have to wait for the real MORs.

As for SUSE's Reply, it is so interesting I'll do a text for you and post it as soon as I can. But in a sentence, SUSE points out that without the arbitration being decided, there is no resolution of the copyright issue, which involves not only ownership but *value*. If SUSE wins the arbitration, it would mean SCO does not own "any UNIX copyrights that are needed to use the version of the Linux operating system that SCO and SUSE jointly developed" because SUSE has a license to use those copyrights and to sublicense them to others, like Novell and IBM. Second, SCO is required to release the Linux kernel code in UnitedLinux under the GPL, so even if it wins the copyrights from Novell, it still can't sue for copyright infringement, because that license expressly allows copying, modification and distribution.

Here are all the filings:

12/23/2009 - 997 - Exhibit / Amended Exhibit A (Summary of Hours by Professional) to First Combined Monthly Fee Application of Ocean Park Advisors, LLC for the Period of September 15, 2009 Through October 31, 2009 (related document(s) 985 ) Filed by Ocean Park Advisors, LLC. (Fatell, Bonnie) (Entered: 12/23/2009)

12/23/2009 - 998 - Reply [Suse's] In Support of Its Motion for Relief From the Automatic Stay to Complete International Arbitration (related document(s) 951 , 992 , 995 ) Filed by Novell, Inc., SUSE Linux GmbH (Greecher, Sean) (Entered: 12/23/2009)

12/23/2009 - 999 - Affidavit/Declaration of Service Regarding Reply [Suse's] In Support of Its Motion for Relief From the Automatic Stay to Complete International Arbitration (related document(s) 998 ) Filed by Novell, Inc., SUSE Linux GmbH. (Greecher, Sean) (Entered: 12/23/2009)

12/23/2009 - 1000 - Debtor-In-Possession Monthly Operating Report for Filing Period As of July, 31, 2009 (The SCO Group, Inc.; 07-11337) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Fatell, Bonnie) (Entered: 12/23/2009)

12/23/2009 - 1001 - Debtor-In-Possession Monthly Operating Report for Filing Period As of July 31, 2009 (SCO Operations, Inc.; 07-11338) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Fatell, Bonnie) (Entered: 12/23/2009)

12/23/2009 - 1002 - Debtor-In-Possession Monthly Operating Report for Filing Period As of August 31, 2009 (The SCO Group, Inc.; 07-11337) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Fatell, Bonnie) (Entered: 12/23/2009)

12/23/2009 - 1003 - Debtor-In-Possession Monthly Operating Report for Filing Period As of August 31, 2009 (SCO Operations, Inc.; 07-11338) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Fatell, Bonnie) (Entered: 12/23/2009)

12/23/2009 - 1004 - Debtor-In-Possession Monthly Operating Report for Filing Period As of September 30, 2009 (The SCO Group, Inc.; 07-11337) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Fatell, Bonnie) (Entered: 12/23/2009)

12/23/2009 - 1005 - Debtor-In-Possession Monthly Operating Report for Filing Period As of September 30, 2009 (SCO Operations, Inc.; 07-11338) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Fatell, Bonnie) (Entered: 12/23/2009)

12/23/2009 - 1006 - Objection of Chapter 11 Trustee to Motion of Petrofsky for an Order Compelling the Trustee's Compliance With Reporting Requirements and Setting Reporting Deadlines (related document(s) 990 ) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al. (Fatell, Bonnie) (Entered: 12/23/2009)

And no, they didn't file the MORs because of Al Petrofsky's motion to compel, according to Judge Cahn's Objection. These MORs were filed the same day as his motion, he says. [Correction: I misread the Objection. It is the MORs and the Objection that were filed on the same day.] The Objection is frosty about Mr. Petrofsky's inaccuracies as to the law and the facts, as you can see in paragraphs 11 and 12. His office told Petrofsky that they were being worked on and would be filed shortly, but he filed the motion anyway. Judge Gross will care about that. October's MOR is still being worked on, because October 30 is SCO's end of year, so there is more work involved. But even that will be filed in January. As to the Bankrupty Rule Petrofsky cited, it became effective in December 1, 2008 and applies to cases filed thereafter, not to this case unless the court says so, only "insofar as just and practicable". Courts have full discretion to alter the schedule anyhow, so if the court were to decide that the new rule applies to this case, which I sincerely doubt, Cahn asks for a hearing so he can present evidence as to why it should be altered in this very complicated case, which Cahn only entered after it had been going on for two years. He asks the court to deny the Petrofsky motion.

So, what was accomplished by this motion? I'd say absolutely nothing, which is what I predicted at its filing. I guess I can't say absolutely nothing, in that it has accomplished one thing. I'd opine that it has made Petrofsky's name mud in a certain courtroom in Delaware.

The legal mistake alone sinks his motion, I would think. Going into court without a lawyer is foolish. You can't pretend to be a lawyer and be successful. Law is complex, and even if you are a brainiac, if you are not a lawyer, you are not. And they'll argue rings around you, because they know what they are doing, and you don't. It's that simple.

But it goes deeper. The law world is polite. It sort of has to be, since it's the nonstop battleground for intellectual arguments. If you insult someone in a filing, accusing them of something, you'd better be 100% right in the sense of being able to prove it in a court of law, because you might just end up having to. In any case, it isn't going to be well received. Courtrooms aren't Slashdot. It's a different culture. When you are insulting *and* wrong on the law or the facts or both, you appear ill-mannered. Lawyers sometimes make that mistake, as we saw in the Wayne Gray filings, but it's so rare as to stand out, and it didn't work, as you may have noted. Nor should it work, in my view. Why, in heaven's name, would you be insulting and attribute bad motives to someone in a court filing? You can't possibly know motives in someone other than yourself. In the law, it's all about the arguments, not the people. It's one thing I like very much about the legal world, actually, that the standard for conduct is set very high. And if Petrofsky had hired a lawyer, his lawyer would have probably told him not to file this motion. It's not like I've never mentioned this before, so I have to wonder what is the actual purpose?

And the law is also very much about credibility. That's because often a matter is he said, she said, and it's a question of deciding who is most credible. Once you've lost your credibility, you've lost something meaningful.

Update: Chris Brown has prepared a chart of SCO's quarterly billings:

Update: Mr. Petrofsky has now submitted his reply:

12/24/2009 - 1007 - Reply of Petrofsky to Objection of Chapter 11 Trustee to Motion of Petrofsky for an Order Compelling the Trustee's Compliance with Reporting Requirements and Setting Reporting Deadlines (related document(s) 990 , 1006 ) Filed by Alan P. Petrofsky (Attachments: # 1 Exhibit A: Revised Proposed Order # 2 Exhibit B: Blacklined revised proposed order) (Petrofsky, Alan) (Entered: 12/24/2009)


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