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SCO Files for Chapter 11 Bankruptcy 421

Posted by Zonk
from the a-true-catastrophy dept.
Can you say "the SCO, the" in German? writes "Trading of SCO's stock has been halted on news that SCO has filed for Chapter 11 Bankruptcy. This move just so happens to fall on the eve of SCO's trial with Novell. One would think that their prior boasts were mostly bluster, that they believe they have almost no chance of prevailing at trial, and that they're now desperate to protect their executives from SCO's creditors while seeking yet another delay. From the release: 'The SCO Group intends to maintain all normal business operations throughout the bankruptcy proceedings. Subject to court approval, SCO and its subsidiaries will use the cash flow from their consolidated operations to meet their capital needs during the reorganization process. "We want to assure our customers and partners that they can continue to rely on SCO products, support and services for their business critical operations," said Darl McBride, President and CEO, The SCO Group. "Chapter 11 reorganization provides the Company with an opportunity to protect its assets during this time while focusing on building our future plans."'"
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SCO Files for Chapter 11 Bankruptcy

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  • w00t!!!! (Score:5, Informative)

    by sconeu (64226) on Friday September 14, 2007 @04:22PM (#20608231) Homepage Journal
    I think PJ needs to send the red dress to the cleaners, so it will be ready when she needs it!
  • Chapter 11 (Score:4, Informative)

    by arth1 (260657) on Friday September 14, 2007 @04:26PM (#20608319) Homepage Journal
    Chapter 11 is bankruptcy protection. A company can emerge from chapter 11 (SGI did), but it's usually a preamble to a chapter 7, which means liquidation and game over, pal.
  • by zoikes (182347) on Friday September 14, 2007 @04:30PM (#20608399)
    read about the Chapter 11 filing here:
        http://ir.sco.com/releasedetail.cfm?ReleaseID=264124 [sco.com]
    ...and put a *wee* bit more pressure on their dwindling bankroll. ;)

  • Re:One word (Score:5, Informative)

    by hpa (7948) on Friday September 14, 2007 @04:30PM (#20608405) Homepage
    According to Wikipedia [wikipedia.org] the English term is epicaricacy.
  • by ishmalius (153450) on Friday September 14, 2007 @04:33PM (#20608477)
    The original SCO, the Santa Cruz Operation, made some good software. We had several servers running it many years ago, along with a few with re-branded "Dell Unix." It's a shame that the original company will be forgotten because of this current abomination.

  • Re:One word (Score:1, Informative)

    by Anonymous Coward on Friday September 14, 2007 @04:35PM (#20608523)
    Not exactly, but Gloating [wikipedia.org] is close, and in which schadenfreude appears as a See reference. Also, if not limited to one word, "malicious glee" might fit.
  • by LouisJBouchard (316266) on Friday September 14, 2007 @04:37PM (#20608563)
    There will be no court case on Monday. The Bankruptcy filing effectively stays the lawsuit until SCO is reorganized or the Bankruptcy judge removes the stay.

    I am thinking the later will happen. I am sure the Novell will file that SCO is really a fiduciary for their assets under the contract and as such, they get first dibs on SCO's assets. In order to find out how much Novell gets though, the case will have to be heard and ruled on. Therefore, the Bankruptcy court judge will lift the stay on the trial.
  • Re:Stock plummetage (Score:5, Informative)

    by jenkin sear (28765) * on Friday September 14, 2007 @04:41PM (#20608633) Homepage Journal
    Actually, it plummeted as the insiders and people with inside knowledge traded out- trading is halted as soon as chapter 11 is filed. It might be interesting to see who actually sold today in the minutes prior to the announcement. The SEC has been known to take a close look at that in the past.
  • Re:Chapter 11 (Score:4, Informative)

    by Anonymous Coward on Friday September 14, 2007 @04:42PM (#20608657)
    No, it's not. Chapter 11 is reorganization of credit, usually done by businesses or individuals with large assets. It's in no way a preamble to chapter 7. If you can't prove that you will be able to reorganize your credit / business and keep your financial obligations, you cannot file chapter 11. It's not like you pick chapter 11, give it a shot, and when you fail, liquidate. It's one or the other. The only thing you said that makes any sense is the word protection - chapter 11 is commonly referred to as protection because you are being protected from involuntary bankruptcy (i.e. your creditor initiated the proceedings after non-payment) while you determine a strategy for payment / growth.
  • "the SCO, the" (Score:5, Informative)

    by Scooter[AMMO] (98851) on Friday September 14, 2007 @04:43PM (#20608675)
    For those that don't get the reference to "the SCO, the" in German, it comes from Episode 9F22 "Cape Feare" of the Simpsons.

    Sideshow Bob is applying for parole claiming that he wouldn't pose a danger to Bart:

    Lawyer: "Don't you have a tattoo that says 'die, Bart, die' on your chest?"
    Sideshow Bob: "No! That's German. It means 'the Bart, the'".
    Parole Officer 1: "No one who speaks German could be an evil man!"
    Parole Officer 2: "Parole granted!"
  • Re:It's Been Fun (Score:5, Informative)

    by jonbryce (703250) on Friday September 14, 2007 @04:44PM (#20608693) Homepage
    Too late. Your stock price feed most likely has a time delay built in. Trading will have been halted as soon as the news comes out. This is the insiders dumping their stock before the news gets out.
  • Wrong word (Score:2, Informative)

    by R2.0 (532027) on Friday September 14, 2007 @04:46PM (#20608755)
    "The Chapter 11 reorg will protect them from getting decimated by Novell when they win their countersuit"

    "Decimated" means destroying 1 in 10. IIRC, if a unit in the Roman Legion was cowardly|treasonous|bad, they counted off by 10's, a number was picked, and whoever had that number was beaten to death by the otehr 9 "luck ones".

    I don't think Novell or IBM want SCO "decimated". I think "obliterated" is more appropriate.
  • Re:Obvious (Score:3, Informative)

    by SillySlashdotName (466702) on Friday September 14, 2007 @04:50PM (#20608829)
    Not sure what they are trying to do, but it isn't what you said.

    They have already been found to be guilty of conversion - taking something that Novell owns (the royalties they were owed) and keeping it for themselves (TSCOG).

    Bankruptcy or no bankruptcy, they have to give Novell what ALREADY belongs to Novell.

    They were obligated by contract to give the royalties to Novell BEFORE any bankruptcy, they are still required to give them AFTER any bankruptcy.

    The only point to be determined by the court is HOW MUCH TSCOG kept that they should not have kept. Whatever that amount, bankruptcy has not effect on their LEGAL REQUIREMENT to GIVE IT BACK TO NOVELL.

    If - which is NOT the case - Novell had gone for punatitive damages or any other kind of damages, then the bankruptcy would have had some effect. As it is, it doesn't (at least not in reguards to Novell).
  • Re:Obvious (Score:4, Informative)

    by Todd Knarr (15451) on Friday September 14, 2007 @04:50PM (#20608833) Homepage

    Not quite. In the case of the royalty money, the rulings thus far are that the royalties are Novell's, not SCO's, money. There's a question of the dollar amount to be determined, but that money isn't a debt owed to Novell so bankruptcy doesn't shield it. Read up on "conversion", which is the term the judge used. If you steal money from someone, you can't use bankruptcy protection to retain it since it's not yours in the first place.

  • Re:w00t!!!! (Score:5, Informative)

    by Slicebo (221580) on Friday September 14, 2007 @05:10PM (#20609175)
    The "red dress" reference pertains to a comment that Groklaw's PJ made a long time ago, saying she was looking forward to putting on her red dress and partying when SCO loses their case in court.

    I'm afraid a "black dress" for wearing to the upcoming SCO funeral will be more useful now.
  • Re:Chapter 11 (Score:2, Informative)

    by TheHappyMailAdmin (913609) on Friday September 14, 2007 @05:14PM (#20609239) Journal

    United Airlines is another prime example of acompany that came out of Chapter 11. UA declared bankruptcy to give them better control over their assets and to give them better leverage to renegotiate contracts with vendors and unions. Neither of those apply to seem to apply to SCO in this case, so I'm doubting they'll come out as well...

  • Re:Dear Darl, (Score:5, Informative)

    by Desert Raven (52125) on Friday September 14, 2007 @05:15PM (#20609251)
    The problem with this theory is that Novell is not a creditor.

    The court ruled that the money *belongs* to Novell. That's a far different legal issue than SCO owing money to Novell.

    It's like a burglar trying to claim bankruptcy in order to keep the stuff he stole. Since the stuff isn't actually his (and in this case has been declared so in a court of law), bankruptcy doesn't protect it.
  • Mod Parent Up. (Score:5, Informative)

    by postbigbang (761081) on Friday September 14, 2007 @05:19PM (#20609327)
    Bankruptcy judges and trustees have carte blanche to deal with creditors, and limit the effects of ongoing litigation. On Monday, everything changes in front of Judge Kimball, who will put the suit into stasis, and give at least a 60 day cooling off period to everything.

    It might turn into a Chapter 7 filing afterwards, and SCO might be forced to liquidate. This is unlikely, however. In the interim, they'll try to convince a judge or referee that they have IP assets that need protecting, along with their agreements with various companies, and will produce a lot of smoke in their quest to simply survive.

    Much attorneys fees will be spent by many companies. Much continued incivility and plain poo will continue to be the hallmark of SCO's perhaps brief existence. Like others, they don't quit until they're just dead. Don't look for much come-uppance. This ends badly, just as it began badly.
  • Awwww Yeeee-aaaah (Score:2, Informative)

    by maz2331 (1104901) on Friday September 14, 2007 @05:28PM (#20609443)
    This sure looks like the beginning of the end-game scenerio for SCO. It will have zero effect on the Novell claims, since they are "equitable" and basically just amount to an embezzelment/conversion charge, not a "debt". It's a return of improperly held property, so bankruptcy doesn't provide any cover there. Actually, it may make it easier for Novell in a couple of weeks to force it into a Chapter 7 liquidation proceeding instead, since the case will already be in the Bankruptcy Courts. They are SO toast now.
  • Re:Chapter 11 (Score:3, Informative)

    by kilgortrout (674919) on Friday September 14, 2007 @05:55PM (#20609805)
    IIRC over 90% of Ch11 bankruptcies wind up in liquidation either through the filing of a liquidating plan or conversion to a Ch7.
  • Funny Excerpt (Score:1, Informative)

    by Anonymous Coward on Friday September 14, 2007 @06:18PM (#20610089)
    http://biz.yahoo.com/prnews/070830/lath046.html?.v=101 [yahoo.com]

    About SCO

    The SCO Group (Nasdaq: SCOX - News) is a leading provider of UNIX software technology and mobile services. SCO offers UnixWare for enterprise applications and SCO OpenServer for small to medium businesses. The SCO Mobile product line focuses on creating mobile platforms, services and solutions for businesses and enhances the productivity of mobile workers. SCO's highly innovative and reliable solutions help customers grow their businesses everyday, especially into the emerging mobile market. SCO owns the core UNIX operating system, originally developed by AT&T/Bell Labs and is the exclusive licensor to Unix-based system software providers.

    Headquartered in Lindon, Utah, SCO has a worldwide network of thousands of resellers and developers. SCO Global Services provides reliable localized support and services to partners and customers. For more information on SCO products and services, visit http://www.sco.com./ [www.sco.com]

    SCO and the associated logos are trademarks or registered trademarks of The SCO Group, Inc. in the U.S. and other countries. UNIX is a registered trademark of The Open Group.

    Source: SCO Group, Inc.

    HAHA ... Someone's in denial!

  • Re:It's Been Fun (Score:3, Informative)

    by drew (2081) on Friday September 14, 2007 @06:22PM (#20610129) Homepage
    Common misconception. Insider trading is not at all illegal, otherwise it would be impossible for company executives to buy or sell their stock, and and stock or option grants for high level executives would be worthless. You could forget about Steve Jobs $1 salary...

    There are just a very strict set of rules that you have to follow when you buy or sell stock as an insider, or with insider information. The main thing, AFAIK, is that you have to file paperwork with the SEC announcing your intention to buy or sell your stock, but I believe that there are other restrictions too. The paperwork that they file is public information, so if you see all of a companies executives filing to significant chunks of their stock on date X, you might want to consider selling any stock you have before that date as well.
  • Re:Sad, sad news (Score:5, Informative)

    by TubeSteak (669689) on Friday September 14, 2007 @06:56PM (#20610451) Journal

    They are literally filing for bankruptcy and assuring their customers that they are fine and can rely on them at the same time... AT THE SAME TIME!
    Ummm... maybe you don't understand what Chapter 11 [wikipedia.org] bankruptcy proceedings are. It's a reorganization of the company, not a dissolution.

    That isn't to say that SCO is safe, but news that they're filing for bankruptcy doesn't really mean anything.

    You want an example of companies that go bankrupt while maintaining operations?
    See: US Airline Industry
  • by falconwolf (725481) <falconsoaring_2000&yahoo,com> on Friday September 14, 2007 @07:36PM (#20610843)

    They are literally filing for bankruptcy and assuring their customers that they are fine and can rely on them at the same time... AT THE SAME TIME!

    That's what Chapter 11 bankruptcy is all about. It allows you to reorganize your business and liabilities so you can stay in business.

    Falcon
  • by vic-traill (1038742) on Friday September 14, 2007 @10:12PM (#20612243)

    Umm.. Sounds to me like the bank needs to review the employment of their IT director.

    Well, like North American banks and Caribbean branches that have a *tonne* of legacy code running on AS/400's, business apps are still out there running in SCO environments, apps that are critical to the business, but which scare the shit out of the organisation in terms of even thinking about unwinding them out of their businesses.

    SCO had a solid biz app developer network out there one upon a time, with a lot of re-seller support, a holdover from when they were *the* PC-based UNIX, long before daryl and his prick henchmen decided to pursue a new 'business model' [cough]pump-and-dump scheme[cough].

    But I guess they're fsck'd now, and looking at a whole different risk - they'll *have* to start working on it.

    And no, I'm not painting a tech-equivalence between a modern AS/400 installation and intel hardware running openserver 6. But the business process analogue is solid, I think.

  • Re:Sad, sad news (Score:5, Informative)

    by badasscat (563442) <basscadet75@nospAM.yahoo.com> on Friday September 14, 2007 @11:00PM (#20612521)
    YAY! Party at my place everyone! Champange for all! :)

    There's nothing to cheer about here. This is SCO's way of weaseling out of their legal liabilities. They conceivably now will not have to pay Novell, or at least not for a long while. It gives them time to continue their court cases without having to settle their debts.

    It's a tactic. They're not out of business, at least not yet.

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