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To read comments to this article, go here
Blank Rome files to get paid, now that SCO has filed for Chapter 7 ~pj Updated 3Xs MORs
Thursday, August 16 2012 @ 02:58 PM EDT

Blank Rome is owed some money for representing SCO Chapter 11 trustee, Edward Cahn, and it would like to be paid, now that SCO has filed for Chapter 7 bankruptcy instead. I know. It's not called SCO any more. So, TSG, then, but it will always be "SCO" to me. Mr. Cahn has asked to be the trustee in Chapter 7, but that hasn't been decided yet, and so meanwhile, here come the bills, going back to December of 2011 and ending July 31, 2012.

If you recall, Cahn represented to the court that SCO now has only $145,352.00 in hand left. If you add up the new interim bills and expenses from Blank Rome, calculated at 80% of the actual bills and 100% of the costs which is how interim bills get paid, it comes to $34,601.78. And so the sand is running out of the hourglass, grain by grain, and this story is not yet at the very end. So even though I don't usually predict outcomes, I think it's safe to say that at this rate, barring the unlikely, Ralph Yarro and friends aren't going to get their $2 million loan repaid by SCO. Ever. Only in their dreams.

How persistent money dreams can be. The lenders agreed, in settling a money dispute between them and Cahn, not to object to the amounts of Blank Rome bills, and that they'd only get paid if there are the following:

6. The Lenders acknowledge and agree that the Restated Debt and the Loan Fee will be payable solely from the Litigation Proceeds.
Litigation proceeds. Such as they are in any alternate universe where SCO finally beats IBM. What were they thinking?

That's how it goes with bankruptcies sometimes. You plan to stiff others and it ends up you getting stiffed yourself. Anyway, we know now who left on Planet Earth still wants the SCO case against IBM to go forward.

Here are the filings:

08/14/2012 - 1422 - Certificate of No Objection Re: Monthly Application for Compensation of Blank Rome LLP (Twenty-First) for the period July 1, 2011 to July 31, 2011 (related document(s)1376) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Tarr, Stanley) (Entered: 08/14/2012)

08/14/2012 - 1423 - Certificate of No Objection Re: Monthly Application for Compensation of Blank Rome LLP (Twenty-Second) for the period August 1, 2011 to August 31, 2011 (related document(s)1377) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Tarr, Stanley) (Entered: 08/14/2012)

08/14/2012 - 1424 - Monthly Application for Compensation (Twenty-Sixth) of Blank Rome LLP for the period December 1, 2011 to December 31, 2011 Filed by Blank Rome LLP. Objections due by 9/3/2012. (Attachments: # 1 Notice # 2 Exhibit A # 3 Exhibit B) (Tarr, Stanley) (Entered: 08/14/2012)

08/14/2012 - 1425 - Monthly Application for Compensation (Twenty-Seventh) of Blank Rome LLP for the period January 1, 2012 to January 31, 2012 Filed by Blank Rome LLP. Objections due by 9/3/2012. (Attachments: # 1 Notice # 2 Exhibit A # 3 Exhibit A) (Tarr, Stanley) (Entered: 08/14/2012)

08/14/2012 - 1426 - Monthly Application for Compensation (Twenty-Eighth) of Blank Rome LLP for the period February 1, 2012 to February 29, 2012 Filed by Blank Rome LLP. Objections due by 9/3/2012. (Attachments: # 1 Notice # 2 Exhibit A # 3 Exhibit B) (Tarr, Stanley) (Entered: 08/14/2012)

08/14/2012 - 1427 - Monthly Application for Compensation (Twenty-Ninth) of Blank Rome LLP for the period March 1, 2012 to March 31, 2012 Filed by Blank Rome LLP. Objections due by 9/3/2012. (Attachments: # 1 Notice # 2 Exhibit A # 3 Exhibit B) (Tarr, Stanley) (Entered: 08/14/2012)

08/15/2012 - 1428 - Monthly Application for Compensation (Thirtieth) of Blank Rome LLP for the period April 1, 2012 to July 31, 2012 Filed by Blank Rome LLP. Objections due by 9/4/2012. (Attachments: # 1 Notice # 2 Exhibit A # 3 Exhibit B) (Tarr, Stanley) (Entered: 08/15/2012)

So what are the bills for? A lot of it is time spent preparing the bills. Back in February, they worked on something related to the IPO litigation, which I thought had settled. And there is a reference to reviewing a settlement agreement with Novell on "SVRY Rooyalties", which I assume means SVRX royalties. There is no indication if the settlement ever finalized or was just in discussion.

But in the last bill, we do see this indication of reality finally settling in:

5/4/2012 - REVIEW AMENDED LOAN AGREEMENT AND NOTE FOR
EVENTS OF DEFAULT AND DISCUSS WIND DOWN WITH S. TARR
A half hour on that. Then on the 9th, we see:
5/9/2012 - TELEPHONE CONFERENCE WITH H. JACKSON
REGARDING STATUS OF CASE AND DISCUSSED
LENDER OPPORTUNITIES
Lender opportunities? They are, one presumes, legion. Mr. Jackson would no doubt be Herbert, one of the lenders. And indeed on May 25th there is this:
5/25/2012 - EMAILS REGARDING POSSIBLE ADDITIONAL FUNDING
Hope springs eternal, especially when it comes to money and litigation, I've learned. Also, we see how hard SCO has held on to any hope at all. That same day, we find Mr. Tarr reviewing "OPA, Lenders, SCO Japan emails" and five days later "emails re financing." On June 6, Bonnie Fatell is reading email about new loan and wind down and then working on the IBM case. In July, there is a status conference with J. Loeb regarding status of the case, then a telephone conference "with UST", and then on the 26th, "emails regarding conversion". They email UST and lender on July 31 about conversion. So they didn't give up until the very bitter end.

That's according to these court filings. I can't represent that this has or hasn't been planned for a very long time. Frankly, I read these monthly reports the way your boss might read expense reports handed to him. They might be true. Probably are. Sorta. But who knows, really? How would you prove it one way or the other?

Update: More, SCO's MORs for June of 2012:

08/16/2012 - 1429 - Debtor-In-Possession Monthly Operating Report for Filing Period As of 6/30/12 (TSG Group,Inc. (f/k/a The SCO Group, Inc.), et al.) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Tarr, Stanley) (Entered: 08/16/2012)

08/16/2012 - 1430 - Debtor-In-Possession Monthly Operating Report for Filing Period As of 6/30/12 (TSG Operations, Inc. (f/k/a SCO Operations, Inc.), et al.) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Tarr, Stanley) (Entered: 08/16/2012)

Down to $133,868 cash "and equivalents" in hand as of the end of June. And $99,727 in "prepaid expenses". "Other Current Assets" = $1,120,205. And then the footnotes:
(1) Total Pre-Petition Liabilities does not reconcile to the amount stated on the Schedules of Assets and Liabilities filed on October 15, 2007 due to timing differences and allocation of accruals.

(2) Due to the allocation of accruals and adjustments booked at month end, the net loss for the 9/15/07 to 9/30/07 period does not reconcile to the change in retained earnings. There will not be an unreconciled difference in future periods as Company reporting periods will correspond with the Monthly Operating Report periods.

The amount listed now for "Secured borrowings under Debtor Loan" is $2,215,736.

Update 2: Mr. Cahn is, indeed, sopping up the last crumbs, with plenty of red ink to spare. The lawyers clean up. That's for sure. Look on page 17 of Docket # 1430, and look for footnote 1:

(1) Adjustment to allocate legal expenses surrounding the IBM and Novell litigation to Cost of Goods Sold at Fiscal Quarter Closes (October, January, April & July).
And if you look at the amount, since the beginning of this bankruptcy, "Cumulative Filings to Date", you find this:
(5,711,909)
That's just for SCO v. Novell and SCO v. IBM and only going back as far as 2007. The saga began in 2003. So the figure doesn't include the SCO bankruptcy, where SCO has to pay both Blank Rome and Boies Schiller and the earlier bankruptcy legal troops before the Chapter 11 Trustee was appointed, or SCO v. Autozone, or SCO v. DaimlerChrysler, or Red Hat v. SCO.

And SCO, now TSG, purportedly wants to keep going, asking to reopen the IBM case. What were these crazy people thinking? And why didn't any of their lawyers tell them it was time to stop digging themselves into a hole? What was the real purpose behind all this? Because if it was money, it didn't work.

Update 3: They've now filed the MORs for July and Ocean Park wants some bills paid too:

08/20/2012 - 1431 - Debtor-In-Possession Monthly Operating Report for Filing Period As of 7/31/12 (TSG Group, Inc. (f/k/a The SCO Group, Inc.), et al.) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Tarr, Stanley) (Entered: 08/20/2012)

08/20/2012 - 1432 - Debtor-In-Possession Monthly Operating Report for Filing Period As of 7/31/12 (TSG Operations, Inc. (f/k/a SCO Operations, Inc.), et al.) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Tarr, Stanley) (Entered: 08/20/2012)

08/20/2012 - 1433 - Monthly Application for Compensation (Thirty-Second) of Ocean Park Advisors, LLC for the period May 1, 2012 to May 31, 2012 Filed by Ocean Park Advisors, LLC. Objections due by 9/10/2012. (Attachments: # 1 Notice # 2 Exhibit A) (Tarr, Stanley) (Entered: 08/20/2012)

08/20/2012 - 1434 - Monthly Application for Compensation (Thirty-Third) of Ocean Park Advisors, LLC for the period June 1, 2012 to June 30, 2012 Filed by Ocean Park Advisors, LLC. Objections due by 9/10/2012. (Attachments: # 1 Notice # 2 Exhibit A) (Tarr, Stanley) (Entered: 08/20/2012)

08/20/2012 - 1435 - Monthly Application for Compensation (Thirty-Fourth) of Ocean Park Advisors, LLC for the period July 1, 2012 to July 31, 2012 Filed by Ocean Park Advisors, LLC. Objections due by 9/10/2012. (Attachments: # 1 Notice # 2 Exhibit A) (Tarr, Stanley) (Entered: 08/20/2012)


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