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Blank Rome Files 8 Bills For a Little More Than Half a Million Dollars and LeapTide and Yarro Make an Appearance - Updated
Saturday, May 14 2011 @ 01:28 PM EDT

Now that most of the assets are in the hands of unXis, and Chapter 7 has been avoided, Blank Rome finally files all its bills, 8 of them, from August of 2010 through the end of March of 2011. Smooth. The bills add up to a little over a half a million, plus expenses.

And LeapTide and Yarro make an appearance, with their lawyers filing as their representative, one in Delaware and another pro hac vice from New York. I think they are serious, as this paragraph may foreshadow:

This Notice of Appearance of proposed counsel, and any subsequent appearance, pleading, claim or suit is not intended nor shall be deemed to waive the interested party’s (i) right to have final orders in noncore matters entered only after de novo review by a district court judge; (ii) right to have the reference withdrawn by the United States District Court in any matter subject to mandatory or discretionary withdrawal; or (iii) other rights, claims, actions, defenses, setoffs or recoupments the interested party is or may be entitled under agreements, at law, or in equity, all of which rights, claims, actions, defenses, setoffs, and recoupments expressly are hereby reserved.
This is going to be the fun part, I suspect. Not for them, of course. But for us, who have been so patiently waiting all these years for the end game.

Here are all the filings:

05/12/2011 - 1272 - Monthly Application for Compensation of Blank Rome LLP, Counsel to the Chapter 11 Trustee of SCO Group, Inc., et al., for the period August 1, 2010 to August 31, 2010 Filed by Blank Rome LLP. Objections due by 6/2/2011. (Attachments: # 1 Notice # 2 Attachment B # 3 Exhibit A # 4 Exhibit B) (Tarr, Stanley) (Entered: 05/12/2011)

05/12/2011 - 1273 - Monthly Application for Compensation of Blank Rome LLP, Counsel to the Chapter 11 Trustee of SCO Group, Inc., et al., for the period September 1, 2010 to September 30, 2010 Filed by Blank Rome LLP. Objections due by 6/2/2011. (Attachments: # 1 Notice # 2 Attachment B # 3 Exhibit A # 4 Exhibit B) (Tarr, Stanley) (Entered: 05/12/2011)

05/12/2011 - 1274 - Monthly Application for Compensation of Blank Rome LLP, Counsel to the Chapter 11 Trustee of SCO Group, Inc., et al., for the period October 1, 2010 to October 31, 2010 Filed by Blank Rome LLP. Objections due by 6/2/2011. (Attachments: # 1 Notice # 2 Attachment B # 3 Exhibit A # 4 Exhibit B) (Tarr, Stanley) (Entered: 05/12/2011)

05/12/2011 - 1275 - Monthly Application for Compensation of Blank Rome LLP, Counsel to the Chapter 11 Trustee of SCO Group, Inc., et al., for the period November 1, 2010 to November 30, 2010 Filed by Blank Rome LLP. Objections due by 6/2/2011. (Attachments: # 1 Notice # 2 Attachment B # 3 Exhibit A # 4 Exhibit B) (Tarr, Stanley) (Entered: 05/12/2011)

05/12/2011 - 1276 - Monthly Application for Compensation of Blank Rome LLP, Counsel to the Chapter 11 Trustee of SCO Group, Inc., et al., for the period December 1, 2010 to December 31, 2010 Filed by Blank Rome LLP. Objections due by 6/2/2011. (Attachments: # 1 Notice # 2 Attachment B # 3 Exhibit A # 4 Exhibit B) (Tarr, Stanley) (Entered: 05/12/2011)

05/13/2011 - 1277 - Notice of Appearance Filed by Leap Tide Capital Management, Inc.. (Klein, Julia) (Entered: 05/13/2011)

05/13/2011 - 1278 - Motion to Appear pro hac vice of Edward E. Neiger, Esq.. Receipt Number DEX010453, Filed by Leap Tide Capital Management, Inc.. (Klein, Julia) (Entered: 05/13/2011)

05/13/2011 - 1279 - Monthly Application for Compensation of Blank Rome LLP, Counsel to the Chapter 11 Trustee of SCO Group, Inc., et al., for the period January 1, 2011 to January 31, 2011, Filed by Blank Rome LLP. Objections due by 6/2/2011. (Attachments: # 1 Notice # 2 Attachment B # 3 Exhibit A # 4 Exhibit B) (Tarr, Stanley) (Entered: 05/13/2011)

05/13/2011 - 1280 - Notice of Withdrawal of Docket No. 1277 (related document(s) 1277 ), Notice of Withdrawal of Appearance Filed by Leap Tide Capital Management, Inc.. (Klein, Julia) (Entered: 05/13/2011)

05/13/2011 - 1281 - Notice of Appearance Filed by Leap Tide Capital, as a DIP Lender, and Ralph Yarro, III, as Collateral Agent for the DIP Lenders. (Klein, Julia) (Entered: 05/13/2011)

05/13/2011 - 1282 - Amended Motion to Appear pro hac vice of Edward E. Neiger, Esq.. Receipt Number DEX010453, Filed by Leap Tide Capital, as a DIP Lender, and Ralph Yarro, III, as Collateral Agent for the DIP Lenders. (Klein, Julia) (Entered: 05/13/2011)

05/13/2011 - 1283 - Monthly Application for Compensation of Blank Rome LLP, Counsel to the Chapter 11 Trustee of SCO Group, Inc., et al., for the period February 1, 2011 to February 28, 2011, Filed by Blank Rome LLP. Objections due by 6/2/2011. (Attachments: # 1 Notice # 2 Attachment B # 3 Exhibit A # 4 Exhibit B) (Tarr, Stanley) (Entered: 05/13/2011)

05/13/2011 - 1284 - Monthly Application for Compensation of Blank Rome LLP, Counsel to the Chapter 11 Trustee of SCO Group, Inc., et al., for the period March 1, 2011 to March 31, 2011, Filed by Blank Rome LLP. Objections due by 6/2/2011. (Attachments: # 1 Notice # 2 Attachment B # 3 Exhibit A # 4 Exhibit B) (Tarr, Stanley) (Entered: 05/13/2011)

And here's what Blank Rome is asking for, month by month, remembering that they ask for 80% now plus expenses and hope for the rest someday, hardy har:

Period CoveredFee RequestedExpenses80% of Fees
August 2010 $99,234.00 $1,711.43 $79,387.20
Sept. 2010 $25,311.00 $444.74 $20,248.80
October 2010 $76,249.50 $151.66 $60,999.60
Nov. 2010 $36,272.50 $781.26 $29,018.00
Dec. 2010 $21,166.00 $100.82 $16,932.80
Jan. 2011 $211,969.00 $812.92 $169,575.20
Feb. 2011 $92,819.50 $1,574.06 $74,255.60
March 2011$81,562.00$2,452.16$65,249.60
Total$644,583.50$8,029.05$515,666.80

So, let's see. That's fifteen, carry the one.... wow. Blank Rome says it is owed a total of $652,612.55, if my math is right, and they would like now 80% of the fees and all the expenses paid, for a total of $523,695.85. That's not even counting the bills from Ocean Park. What does SCO still have to left to pay its bills? God only knows, but here are the last monthly operating reports SCO filed as of the end of February, where SCO Operations listed $779,827 in cash in the bank at the end of that month.

I'm thinking after SCO pays Blank Rome and Ocean Park, what will there be left over for Yarro and LeapTide or anyone else? Without all the figures, who can say, but I suspect this might explain their sudden appearance on the scene. I'm thinking this could get interesting.

Wait. You mean... Yarro and the gang did all this for nothing?

Update: Maybe not. If you'd like to review what LeapTide and Yarro got as collateral for the money they loaned SCO, here is where you can find it. If, just saying, if the appeals court were to rule in SCO's favor, three pieces of collateral that come into play potentially would be causes of action, the litigation winnings, should there ever be any, and the commercial tort claims. Here's the list of collateral, once again:

  • Inventory
  • Accounts and Rights (leases, contracts, deeds of trust, collateral assignments, etc.)
  • Equipment and Fixtures
  • General Intangibles, which is defined as bank accounts, causes of action, business records, customer lists, tax refunds, intellectual property, inventions, patents, copyrights, trademarks, etc.
  • Investment Property. Like securities. All voting rights associated with the shares.
  • Bank Accounts.
  • Insurance. All right, title and interest in any policies.
  • Books and Records, including the cabinets and drawers that hold them, and "computer records, lists, and software programs, wherever located".
  • Commercial Tort Claims.
  • Litigation Proceeds.
  • Payment Intangibles. This seems to mean any settlement money or judgments where money flows to SCO.
  • Products and Proceeds. "All products and proceeds of any and all of the foregoing, including, but not limited to, proceeds which constitute property of the types described in the foregoing paragraphs of this Section 2 and, to the extent not otherwise included, all payments under insurance... or any indemnity, warranty or guaranty..."
But as the lawyer for LeapTide pointed out the other day in his letter [PDF] to Cahn, SCO sold its assets to UnXis allegedly without proper notice to the lenders:
I. BREACH OF CREDIT AGREEMENT

Section 5.10(b) of the Credit Agreement authorizes the Debtors to "retain and use fifty percent (50%) of the net proceeds (defined as gross proceeds from one or more Core Asset Sale(s), less the direct and reasonable closing fees and expenses of the sale or license transaction) from any Core Asset Sales and one hundred percent (100%) from the proceeds of the sale of all other SCO assets (excluding the sale of any rights in the Litigation and/or any portion of the Litigation proceeds)," but only with prior written notice to the Lender. Section 5.10(b).

Despite the Debtors' recent sale of substantially all their assets to unXis, Inc., you did not provide such written notice to the Lender.

Here is the Credit Agreement. Now, notice the breakdown in the Exhibit A's attached to each bill. For example, here's Exhibit A [PDF] attached to the March bill. On page two, you'll see the breakdown, and guess where almost all the time went? -- to the sale of the assets, 153 out of a total 168.7 hours that month. So, according to the deal, first you subtract that section of the bill before the lenders get their half of the proceeds. Same story in February [PDF]. A total hours of 199.5, and 168.3 was spent on the sale of assets.

Half of nothing is nothing, eh? But here's my question. When the lenders write that they want the collateral, in view of the breach, do they mean the collateral that is left or do they intend to try to overturn the sale of the assets to unXis?

Update 2: Charles Dickens, Bleak House:

This made us some quarter of an hour late, and when we came to Westminster Hall we found that the day's business was begun. Worse than that, we found such an unusual crowd in the Court of Chancery that it was full to the door, and we could neither see nor hear what was passing within. It appeared to be something droll, for occasionally there was a laugh and a cry of "Silence!" It appeared to be something interesting, for every one was pushing and striving to get nearer. It appeared to be something that made the professional gentlemen very merry, for there were several young counsellors in wigs and whiskers on the outside of the crowd, and when one of them told the others about it, they put their hands in their pockets, and quite doubled themselves up with laughter, and went stamping about the pavement of the Hall.

We asked a gentleman by us if he knew what cause was on. He told us Jarndyce and Jarndyce. We asked him if he knew what was doing in it. He said really, no he did not, nobody ever did, but as well as he could make out, it was over. Over for the day? we asked him. No, he said, over for good.

Over for good!

When we heard this unaccountable answer, we looked at one another quite lost in amazement. Could it be possible that the will had set things right at last and that Richard and Ada were going to be rich? It seemed too good to be true. Alas it was!

Our suspense was short, for a break-up soon took place in the crowd, and the people came streaming out looking flushed and hot and bringing a quantity of bad air with them. Still they were all exceedingly amused and were more like people coming out from a farce or a juggler than from a court of justice. We stood aside, watching for any countenance we knew, and presently great bundles of paper began to be carried out—bundles in bags, bundles too large to be got into any bags, immense masses of papers of all shapes and no shapes, which the bearers staggered under, and threw down for the time being, anyhow, on the Hall pavement, while they went back to bring out more. Even these clerks were laughing. We glanced at the papers, and seeing Jarndyce and Jarndyce everywhere, asked an official-looking person who was standing in the midst of them whether the cause was over. Yes, he said, it was all up with it at last, and burst out laughing too....

"Pray what has been done to-day?" asked Allan.

"I beg your pardon?" said Mr. Kenge with excessive urbanity.

"What has been done to-day?"

"What has been done," repeated Mr. Kenge. "Quite so. Yes. Why, not much has been done; not much. We have been checked—brought up suddenly, I would say—upon the—shall I term it threshold?"

"Is this will considered a genuine document, sir?" said Allan. "Will you tell us that?"

"Most certainly, if I could," said Mr. Kenge; "but we have not gone into that, we have not gone into that."

"We have not gone into that," repeated Mr. Vholes as if his low inward voice were an echo.

"You are to reflect, Mr. Woodcourt," observed Mr. Kenge, using his silver trowel persuasively and smoothingly, "that this has been a great cause, that this has been a protracted cause, that this has been a complex cause. Jarndyce and Jarndyce has been termed, not inaptly, a monument of Chancery practice."

"And patience has sat upon it a long time," said Allan. "Mr. Kenge," said Allan, appearing enlightened all in a moment. "Excuse me, our time presses. Do I understand that the whole estate is found to have been absorbed in costs?"

"Hem! I believe so," returned Mr. Kenge. "Mr. Vholes, what do YOU say?"

"I believe so," said Mr. Vholes.

"And that thus the suit lapses and melts away?"

"Probably," returned Mr. Kenge. "Mr. Vholes?"

"Probably," said Mr. Vholes.


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