Posted on 10/25/2007 10:06:39 PM PDT by Ernest_at_the_Beach
The SCO Group, working to emerge from Chapter 11 bankruptcy protection, hopes to sell its Unix assets to York Capital Management for up to $36 million, the company said this week in regulatory and bankruptcy court filings.
Through the deal, York would provide SCO with $10 million in cash; up to $10 million in credit to fund its Linux-related legal fight and to get 20 percent of revenue from that action; $10 million for a 20 percent stake in the company; and $6 million to license the Hipcheck products from SCO's Me mobile device software effort and to share revenue from that line, according to the U.S. Bankruptcy Court filing.
SCO, which is engaged in expensive, controversial but so far largely fruitless Linux-related lawsuits against Novell and IBM, urged the court to approve an accelerated bidding process for the assets. The auction would allow others to offer a higher price than York, but time is of the essence, the company argued in the bankruptcy court filing.
"Based on debtors' (SCO's) financial condition, but more importantly the skittishness of existing and potential customers" to engage in a business relationship with SCO, "the debtors must move quickly to realize the highest and best price for their assets," the filing said.
The SCO Group has been beleaguered by steadily dwindling revenues. It suffered a major legal setback in August when a court found that Novell retained the Unix copyrights SCO thought it bought. But it looks like the Lindon, Utah-based company plans to keep on fighting: the asset purchase agreement specifically excludes the suits against Novell and IBM from transfer.
Unix has had a long and winding history as assets have been sold from the original sponsor of the operating-system project, AT&T. The assets were sold to Novell, then to the Santa Cruz Operation, then to Linux seller Caldera International, which renamed itself The SCO Group after trying to remake its business on the SCO Unix products. It's a tortured issue trying to decipher exactly what intellectual property--patents, trademarks, copyrights and trade secrets--traveled to new ownership or remained with earlier owners.
An SCO representative didn't comment beyond the filing. York didn't immediately respond to a request for comment.
Just unreal...
I just can’t believe that such an obvious shake down scheme hasn’t broken any laws. There must be some way to take these schmucks down.
SCO Has a Bid; Would Like More - Updated
Tuesday, October 23 2007 @ 05:21 PM EDT
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SCO has filed a Motion to Approve Emergency Motion of the Debtors for An Order (A) Approving Asset Purchase Agreement, (B) Establishing Sale and Bidding Procedures, and (C) Approving the Form and Manner of Notice of Sale [PDF]. It asks the court to let it happen. There are more filings, which I'll put up here shortly, but I was pretty sure you'd want to know about this one immediately.
SCO wants to sell off certain of its Unix assets, namely "certain related claims in litigation, as well as certain transfer, cross-license and related agreements pertaining to the Hipcheck product line and Me Inc. Mobile intellectual property." They say York Capital Management wishes to buy them. Or, more precisely, the Purchaser is "a newly formed entity affiliated with one or more funds managed by JGD Management Corp. d/b/a York Capital Managment".
I guess this plan sounds better to SCO than paying Novell and going into Chapter 7. Here's the APA [PDF]. I seriously wonder how SCO can get the court to agree to sell off its assets, when it owes already more than it can pay, according to the likely Utah court's view, on a hope and a dream about SCOsource. But hey, nothing in this case is normal. And I'm not so sure about some of the players, either.
Among the excluded assets are "Seller's litigation with Novell and IBM, and its claims and choses in action other than the Linux Litigation." The total purchase price, SCO says, consisting of cash and non-cash components is "in the estimated aggregate amount of up to $36,000,000". SCO has to reimburse up to $50,000 of York's fees and expenses in connection with the deal. And if York is designated as "stalking horse" under the Bid Procedure Order, and if others outbid York, SCO has to pay them a $780,000 breakup fee and reimbursement of all expenses incurred by York up to $300,000. Hey, big spender.
So, you tell me: which of them is most nuts? They want to have an auction on who wants to sue AutoZone and resurrect SCOsource? Hey, folks. The line starts here. Don't push.
And here are all of today's filings:
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While still fighting in the courts and fresh from filing for Chapter 11 bankruptcy protection last month, The SCO Group could soon be selling its steadily-declining Unix business.
In a filing in US Bankruptcy Court in Delaware, the Lindon, Utah-based company said it had received a "potential" $US36 million offer for its Unix business from JGD Management, an umbrella business of New York-based investment firm, York Capital Management. The filing has been posted on the Groklaw.com website, which has been tracking the legal records of the ongoing lawsuits between SCO, IBM, Novell and others. In it, SCO reports that the offer includes money for its Unix business, litigation claims and for litigation expenses.
The bid is subject to approval by the bankruptcy court, according to the filing, and competitive bids could still be accepted from other potential buyers.
SCO filed for Chapter 11 bankruptcy reorganization last month as it began seeking ways to stay in business amid mounting expenses and several legal rulings that have hurt its legal fights with IBM and Novell.
If SCO gets out of the Unix business, it would continue solely as a mobile application platform vendor, which it has been working to become over the last several years.
A SCO spokesperson could not be reached for comment about the buy-out offer.
A spokesperson for York Capital Managament declined to comment on the matter.
Three weeks ago, in an interview with Computerworld US, SCO CEO, Darl McBride, said his company would continue to make moves to remain a viable business, despite the death knells sounded by some critics.
According to the terms of the York offer, approval of the deal is required from the bankruptcy court by November 9, with the transaction needing to be completed by December 7.
They are making a joke of the court system/.
$36M, however nice for you and me, is chump change in the big leagues.
Just dump the whole thing in the river and be done with it.
I’ve always believed that their angle was to get one of the “bigs” to buy them out instead of fighting a protracted court battle. If documentation or witnesses to that effect turned up, I think there would be a good case for some form of fraud prosecution.
Heck Im selling UNIX right now! I have as much right to sell it as sco does and I’m less likely to use the money in frivilous law suits..
SCO owns all rights and ownership of the core UNIX operating system source code originally developed by AT&T/Bell Labs..Since it's been decided that they do not have those rights, isn't this false advertising?
I’d imagine that existing creditors would have some say over this in a bankruptcy court. Of course, for corporations, bankruptcy court is a weird wonderland where just about everyone is screwed but the lawyers.
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