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SCO Files MORs for September in the Bankruptcy
Monday, November 08 2010 @ 08:12 PM EST

SCO is apparently almost out of money, according to the MORs they just filed for September in the bankruptcy. Maybe that's the explanation for SCO's sudden desire to expedite the appeal after initially asking for more time to even file its brief. Unless they have a buyer, I wonder if they can even last until January, when the appeal is scheduled to be heard.

SCO Operations shows a negative cash flow, and only $738,090 in the bank. Total disbursements for the month were more than that, $886,656 of which $409,902 was for professional fees. At the end of August, SCO showed cash at the end of the month in the amount of $1,369,642, with a positive cash flow, and only $397,344 in disbursements. I gather they were behind, perchance, on paying professionals?

Here they are, the filings:

11/08/2010 - 1195 - Debtor-In-Possession Monthly Operating Report for Filing Period As of 9/30/10 (The SCO Group, Inc.; 07-11337) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Attachments: # 1 Certificate of Service) (Fatell, Bonnie) (Entered: 11/08/2010)

11/08/2010 - 1196 - Debtor-In-Possession Monthly Operating Report for Filing Period As of 9/30/10 (SCO Operations, Inc.; 07-11338) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Attachments: # 1 Certificate of Service) (Fatell, Bonnie) (Entered: 11/08/2010)

The other big payment was almost $200,000 to the subsidiaries not in bankruptcy.

Page 20 shows a "Summary of Unpaid Post Petition Debts". Yarro's loan is listed, of course, at $2,110,299, but so are taxes, wages, and accounts payable, and "other post petition liabilities ($2,855,732), total $6,651,161. This footnote explains the "other" liabilities:

(A) Other post petition liabilities is comprised of Intercompany payables, deferred revenues under GAAP to be recognized into income over future periods, and general accruals under GAAP such as coop advertising, royalties expense. The Deferred revenues are amortized monthly into revenue. The Intercompany payables represents cash transactions between the company and its affiliates for collection of revenues, offset by payment of operating expenses and payroll and other transactions under the Agency Agreements. General accruals are accruals based upon estimates to which specific identified vendors are not known. Intercompany payables represent 47% of Other Post petition liabilities with Deferred revenues representing 25%, Accrued Chapter 11 Fees representing 15% and general accruals representing 3% of Other Post petition liabilities. For a detail listing of the make up of theses amounts see " FORM MOR-3 (CONT'D) in the MOR package.
Yes, it says "theses".

I really don't understand the court allowing this to go on and on, leaving the creditors with no hope that I can see, while the "professionals" clean up. SCO could have paid everybody on the creditor list when it first filed for bankruptcy protection in September of 2007. So what exactly is the protection? All the money went to pay professionals instead of creditors. Or so it looks to this observer. Why? To what end?


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