SCO Preps Appeals Against Novell and IBM 163
An anonymous reader writes "It looks like SCO will be emerging from the almost dead soon, with new owners and $100 million on board. SNCP is adjusting the business strategy, according to this report on TG Daily, SCO is saying goodbye to CEO Darl McBride and is also preparing to appeal the summary judgments in the cases against Novell and IBM. If you have thought the chapter was closed, think again. Those $100 million can go a long way (even if SCO has to pay 17% interest on it)."
Now that's a deal. (Score:5, Insightful)
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Daryl and his big moouth.
Re:Now that's a deal. (Score:5, Insightful)
We've determined that:
- They never ponied up the code that supposedly infringed, strongly suggesting that it doesn't exist.
- They didn't even have the right to the copyrights of the Unix code they claimed Linux infringed upon.
- They (probably fraudulently) collected license money for "protection" against the non-existent claims in #1 on the inelligible code in #2.
- They did it all while making themselves rich and the stockholders poor through pump-and-dump.
Shouldn't people like this be in jail?You guys completely miss the point (Score:4, Interesting)
If they've got their mitts on some more money then more legal work is a good way to pump some of that cash into a safe place. No point in them leaving cash in a sinking ship.
Re:Now that's a deal. (Score:4, Funny)
I know. There's a musical coming out on Broadway soon, I'm sure. I think it's called: "S-C-O, Way to Go!" with such hits as "It's a wonderful mockery", "It's my rights and I'll do what I what with them", "Back in the Old Routine", "Look what happened to Darl" and the big hit number "Hello Lolly!"
Re:Now that's a deal. (Score:5, Insightful)
I think the goal here is to get SNCP onboard as a creditor ahead of any judgements against SCO. That way, they can continue to run up the expenses and drag out the court actions. When the day of reckoning is finally here, SNCP will be a huge creditor. They will take quite a loss, even after chewing up what remains of SCO. I suspect SNCP will get reimbursed via the PIPE fairy or whoever was underwriting the deal with Baystar.
As a private company, SCO will be exempt from all kinds of shareholder disclosures, SEC regulations, etc. Very useful in pursuit of this strategy.
There is one factor that the SCO folks may not have considered: Their strategy sets a scary precedent. If it works, we might see the "scorched earth" defense become commonplace. We might even see individuals doing the same type of thing when faced with a liability suit. This would make a mockery of the judicial system. SCO has to lose, and lose big. Their financial co-conspirators need to be exposed and clobbered. Unless they get a royal smackdown from the court, this behavior will be validated and probably repeated by others in the future.
Except For One Thing (Score:5, Insightful)
As a bonus, the court that will be deciding how much it is will be the same one that SCO told no trust fund was required because bankruptcy wasn't imminent just a few weeks before they filed for bankruptcy. They are almost certainly well and truly fucked here, and "spin" isn't going to change that. Their whole strategy seems to be to provoke the judge to anger so they have an issue for appeal, but Kimball is a pretty cool customer who will make sure that his ruling is air-tight.
The Utah court's summary judgment held that SCO does *not* own the copyrights to the code they are licensing. SCO built their entire case around a theory of "but... we paid a lot of money for this business, and of course it transferred the copyrights to us! Never mind what the actual contracts said." Too bad for them that the court rejected that argument totally.
And, this article presumes that the BK court will approve the deal, and do so over the objections of the major creditors. The judge may well not approve the deal as written, as there is no real guarantee of the additional $95M being actually available, and further since the $95M is a line of credit at a 17% interest rate it could magically evaporate at any time.
The deal really doesn't provide any security for the creditors at all, nor does it put the post-bankruptcy SCO in a financial position where it is unlikely to be back in bankruptcy in the near future. Indeed, it puts the company squarely in debt for even more than it faces to begin with due to the interest. The creditors names change, but the debt remains and really grows exponentially.
The only way I can see the court approving this is if the entire $100M were a straight-up equity purchase which was a cash infusion sufficient to pay off and retire all the debt. Just moving the chairs around on the deck isn't going to pass muster here.
As for the appelate courts, SCO's behavior prior to summary judgement will be a huge factor. They dragged the case out, refused to comply with discovery orders, and changed their arguments constantly.
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Just make sure that that next town is Washington, and it'll be an improvement :).
What the hell? (Score:2, Interesting)
The Wizard of Oz (Score:5, Insightful)
Pay no attention to the largest proprietary software company in the world behind the curtain.
Re:The Wizard of Oz (Score:4, Interesting)
Re:What the hell? (Score:4, Funny)
Wouldn't it be more correct to call them zombies at this point? Vampires? The undead?
Something like that.
Re:What the hell? (Score:5, Funny)
Re:What the hell? (Score:4, Funny)
Cant sleep, clowns will sue me
Cant sleep, clowns will sue me
Cant sleep, clowns will sue me
Re:What the hell? (Score:5, Informative)
However the jury is still out on weather this is another Microsoft thing like BayStar
http://www.eweek.com/c/a/Desktops-and-Notebooks/Whats-Behind-the-SCO-Buyout/ [eweek.com] SJVN's oppinion incase you are interested
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Re:What the hell? (Score:4, Interesting)
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It said "click here to skip, or wait 6..5..4..3 seconds". Fair enough. er. shouldn't there be an advert?
Or some wag has just decided to waste my time for the hell of it.
Dear Novel and IBM (Score:5, Funny)
This time please use holy water and lawyers made of silver.
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They are SCOmbies and their weaknesses are still unknown (their mortal weaknesses that is--I think plenty is known about their legal weaknesses).
Re:Dear Novel and IBM (Score:5, Funny)
Re:Dear Novel and IBM (Score:4, Funny)
Re:Dear Novel and IBM (Score:4, Funny)
The problem is, we're dealing with technology. Holy water has salt in it (I suppose to keep it from getting moldy or something). Salt water is corrosive. Spray salt water over your keyboards and servers and stuff, and bad things happen.
I know, I had a client who did that. But at least when it was all over, the gear wasn't possessed any more.
I don't think that will be enough for SCO.
Re:Dear Novel and IBM (Score:5, Funny)
Wouldn't it have been easier just to uninstall Windows?
Comment removed (Score:5, Funny)
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They'd tarnish too quickly
Maybe instead all the lawyers opposing SCO should change their last name to "Summers".
Doesn't the sale have to be approved first? (Score:5, Informative)
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No kidding. And here we all thought PJ was going to have to start looking for a new job soon.
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Gerry
Re:Doesn't the sale have to be approved first? (Score:5, Funny)
Obviously PJ arranged the new funding so Groklaw could continue operating.
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She would have had plenty of time to find one...IBM offers excellent severance packages.
Another journalist who isn't keeping up. (Score:5, Informative)
For example, you would think he would have noticed that Novell has already objected [groklaw.net] to the reorg because of the sketchy details. Like, does SNCP even have access to that kind of money? There is this article [itjungle.com] that says Norris might have Middle East connections, but no explanations of why those connections would want in on the SCO case. Or how much of the bill they'd be willing to cough up. The schedule's a bit iffy too. Novell points out that SCO's hanging on to the "definitive documents" on the reorg and isn't planning on releasing them until the day that objections to the reorg are due. Read carefully and you'll see that objections are due by March 26th at 4:00pm, while the documents are to be released on March 26th, but with no time stated. Any bets on SCO planning on providing those at 4:01pm?
Keep in mind that SCO has already proposed and scrapped [groklaw.net] a bailout deal. In that one, they were playing a shell game where all the company's assets (and execs) went one way, while all the company's liabilities went the other. Needless to say, the courts weren't going to let that happen.
The bottom line is that this is SCO, so you already know it's a scam. It's just a matter of waiting and watching to determine what kind of scam they're trying to run this time.
I seriously doubt they will appeal to anyone (Score:2)
Why? I just wanna know why? (Score:3, Funny)
Re:Why? I just wanna know why? (Score:5, Funny)
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Bad summary (Score:5, Informative)
They're still almost dead - this deal doesn't change anything about the fact that they owe a ton of cash to Novell, and will soon owe more to IBM.
The $100M is really $5M, plus a LOAN of *up to* $100M.
And the loan's interest rate is 17% plus prime (so closer to 21%.)
This is like you claiming that MBNA invested $50,000 in you when you signed up for a new credit card.
I can live with that (Score:5, Insightful)
Using this 21% loan to file appeals is a lot like using your credit card to buy lottery tickets.
They're that desperate, and I can live with that.
Re:I can live with that (Score:5, Funny)
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Investor Brochure:
Invest in SCO, a New Businessplan for the New Economy.
Give us money and we'll make all your dreams come true.
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Remember kids, never commit suicide....
until after you've maxed out your credit cards and triple checked all your lottery ticket results.
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Can you have a credit card if you are bankrupt?
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When my mother died recently, I was surprised to find that she had 2 credit cards. She had declared bankruptcy a few years ago and had no assets. The cards were from the same issuer, and each had something like a $2,000 limit and and interest rate of 25%.
When I called to let the issuer know that she had died, the rep wanted my name and address so that they could arrange payment. I just laughed at him. So he said he'd send the bill to her address on file.
Yeah, good luck with that.
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Why am I suddenly reminded of the Princess Bride??
Inaccurate subject (Score:5, Informative)
Re:Inaccurate subject (Score:5, Informative)
It's YASPS - "Yet Another Stock Pump Scheme". Darl, contrary to his public protests, is VERY happy to be getting out/cashing out.
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1. Take control of a second-rate UNIX distributor 2. Squander all the products that were being made to the point there is no actual product development taking place. 3. Hire your lawyer brother and go after giant technology companies *and* customer companies simultaneously for copyrights you *know* you don't have. 4. Tie up the court system for more than five years. 5. Go bankrupt. 6. Get bought out. 7. ??? 8. Profit!!!
Step seven might multiply into numero
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They're still trading in the pink slips. Tht's why they issued some shares with a strike price of 8 cents when they were around a nickel, then went on this latest crusade to pump the price back up. Nice way to double your money without spending a penny.
Well (Score:2)
Re:Well (Score:4, Informative)
Read the business summary and note the previous name. Bankruptcy, especially Chapter 11, doesn't mean a company disappears. If there are parts of the company that are viable, a reorganization means these parts get a new lease on life.
Cheers,
Dave
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But in this case, there are no legitimate viable parts of the business. Suing your customers is NOT a viable business, and suing your suppliers for owning stuff you stole from them isn't either.
Comment removed (Score:5, Insightful)
Re:poetic justice (Score:5, Interesting)
Don't forget that the loan shark gets a controlling interest in the company. What are the chances the shark (acting as SCO) is going to ask itself (SNCP) for millions of dollars to pay a judgment to Novell? If/when that happens, the shark needs to ask itself whether its worth the risk, even at 21%. It only makes sense if SNCP really believes that SCO can get the Novell judgment reversed on appeal and win some money from IBM. That could be a big, risky bet.
The deal appears to be that SNCP is committed to loaning SCO $95 million, but only once. If the SNCP loans SCO $95 million on Monday and SCO repays the loan on Tuesday, it appears that the commitment has been fulfilled.
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Hmm...
If SCO has the $95 million in its bank account, even for just one day, which debt must be paid first? In other words, would they maybe have to pay Novell first?
I think there are a lot of open questions here, and even an experienced lawyer might find it difficult to predict the outcome.
Re:poetic justice (Score:5, Interesting)
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Ruh-uh, Reejay! Roo rarey!
Not even for a Tuxsnack?
Roh-ray!
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Scorched earth (Score:2)
SCO doesn't have anything yet (Score:5, Insightful)
They don't have squat until the BK court approves it. Even then they only get 5 million and 95 million in flash cash. If the trustee tells them to put the money in escrow against potential judgments from IBM and Novell, that will flush this deal. This is all show but I haven't figured out who the audience is supposed to be. The BK court isn't going to be impressed.
I'm not sure what they're going to appeal. SCO dug themselves a really deep hole, an appeal is a long shot.
No one with a brain would loan SCO a nickel. It would take a cash cow like Microsoft to convince anyone to get in bed with SCO. Maybe that answers who the audience is supposed to be. Like there are serious players who think SCO's IP claims have merit. Ooooo, scary. If that's the case this is to business strategy what the Zune is to Apple.
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Darl could learn from the Monkey Dancer (Score:3, Insightful)
Why in the world would someone take $100 Million perfectly good dollars and just throw them into this worthless money pit? Incidentally, if you write SCO as $C0, and then move the C to the front, you've got, "See? $0." And it seems to me that's what everyone ends up with who touches this thing with a 100 million foot pole! Who in the heck wants SCO's OS anymore? You know what? Even if they do want it, does anybody really want software from a company that might disappear at any moment due to all this litigation drying up it's well of money? Where will they get support?
Especially, why would they do this when Linux and the *BSDs are so far superior at this point due to the efforts of millions and the incredible amount of support, mindshare, and money behind them from individuals, small businesses, large businesses, and even governments. Not to mention that all modern Apple Macs are running a UNIX operating system that can accomplish all, or at least nearly all, of the functions that can be accomplished by any other UNIX or UNIX-like system out there. Not to mention further that all of the aforementioned OSes are superior in an uncountable number of ways to SCO's OS. Not to mention that the entire code to Linux and the *BSDs is available for your perusal or participation, as with a tremendous variety of programs that are run on these systems, from Apache to something that starts with a Z. Why would anybody pay good money to SCO for it's stuff when SCO is acting like the bully at the playground and when all of this is available for free, both libre and if you want to download and build stuff yourself, gratis...
In my opinion, SCO is no longer a software company, but a litigation company.
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They have been for years. Did you just now notice this? Or are you stating this for the benefit of the few people who don't know? (Obviously, that would include some fairly wealthy people... or people with ulterior motives.)
Penny Arcade (Score:5, Funny)
money doesn't cure everything (Score:3, Interesting)
Even a large infusion of cash is unlikely to do SCO any good. They have no income to speak of and no product likely to generate any. Their lawsuits have no chance of succeeding given the ruling that they never acquired the Unix copyrights from Novell. Even in the extremely unlikely event that this is overturned on appeal, they still have to prove infringement of their copyrights, which, with discovery complete, they have still been unable to do, and they have to overcome the problem that they themselves distributed Linux under the GPL, which is a huge problem for them. Finally, no matter what happens, they are going to have to pay millions to Novell since they failed to pass on to Novell the income from their franchise to sell Novell's Unix property, for which they (SCO) were merely to receive a 5% fee. Money will pay the lawyers a little bit longer, but it isn't likely the lawyers can postpone the end very much.
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Even if they have no income, as long as they sell stock they have cash flow and you can bet that case flow will go back into paying the 21% interest and minimum payment on whatever SNCP loans them. I'm sure they'v
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What makes you think SCO can sell stock? Nobody will buy it other than kooks or anti-Linux folks willing to pay to harass Linux. SCO has already been delisted! And what assets do you think they have? Nothing much. I don't think there's anything worth stripping.
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BTW, is there anybody here who believes that crap about SCO and mobile markets? They have about the same ability to compete in the global mobile marketplace as I do.
Put SCO down (Score:5, Interesting)
How many of you would contribute $50 to take a controlling interest in this festering pimple of an "IP" company? If the next ~80,000
Create a non-profit (name it SLASHX, perhaps) or some other legal entity, raise funds and buy shares. The percent of ownership remaining appears on a sidebar with a link to some collection agency. Make Stallman or some other credible figure chairman and just keep buying shares till "we" hold 51%.
I'm no financial guru. Perhaps the idea is naive. However, you can damn well bet I'd contribute.
Re:Put SCO down (Score:5, Interesting)
Also, it's quite possible Novell will own them anyway before this has finished playing out, because of the $37M SCO owes them. This shell game with loans won't necessarily change that. While they're posturing hard now, I have my doubts as to whether these "angels" will really cough up all that money when the courts force the company to do that.
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Most likely too SCO never had any assets worth anything to IBM. Thus IBM shareholders would not approve IBM buying SCO.
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Re:Put SCO down (Score:5, Informative)
It's too late for that. SCO is in bankruptcy court, in chapter 11 proceedings. This means that the current stockholders have effectively no say in what goes on at this point. It's up to the SCO to come up with a reorganization plan that will allow it to continue to operate. Generally a reorganization plan includes cancelling any and all common stock, as does theirs "On the Effective Date, the existing common stock and common stock equivalents of SCO Group shall be cancelled and extinguished." Anyone buying the stock now is hoping for a miracle and that SCO will somehow continue to operate without completing chapter 11 reorganization.
In summary, doing this would neither give you control of the company now, nor when they exit chapter 11.
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Sure, this is taking more time, but each defeat is another reminder that their original case had no merit. That's a good thing for the world to know.
Re:Put SCO down (Score:4, Interesting)
So as soon as anyone acquires anywhere close to enough stock to make a voting difference the board of directors will just issue more voting stock which they will control. Source:http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?dcn=0000891020-07-000020&Type=HTML [edgar-online.com]
We have the technology (Score:2)
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(a) The directors will own 51% as insurance against this anyway,
(b) the remainder of the shares will be split between maybe thousands of investors and you can't buy them all at once
(c) Because of (b) it will take long enough to be recognised as a hostile takeover attempt, and people will stop selling to you.
Won't stick (Score:5, Interesting)
Stephen Norris Capital Partners (SNCP) (Score:2, Interesting)
Will they even get an appeal (Score:5, Informative)
I don't care how slick the lawyer is, SCO had a summary judgment against them. Provided the judge in the case dotted all the i's and crossed all the t's those things are damn near impossible to successfully appeal. I'd put the odds against successful appeal at 20 to 1. More likely than not the appeals court will simply say, 'No' and that will be the final whimper of SCO.
The only thing SCO needs to prep (Score:3, Funny)
who cares yet? this is not factual. (Score:5, Informative)
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article here = incorrect
This is one of the worst articles I have ever seen! Not one bit of investigation was done, while there is voluminous information readily available elsewhere on this topic. It is like posting some company's press release and calling it news reporting. My first impulse was to do a little research to find out who is this TG Daily. Apparently it sprang from Tom's Hardware, but both are owned by TG Publishing LLC, a Bestofmedia Group company. The author is Wolfgang Gruener, a senior ed
What about Darl? (Score:2)
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That's one of the problems with US corporate law. There are reasons, perhaps good ones, why corporate officers aren't directly penalized for making wrong decisions (in a company running legally and ethically, the company can and will administer appropriate penalties). However, when the top officers of a company like SCO or Enron do the things that they have done, there needs to be personal responsibility.
Not that it's simple to draw the line.
Re:What about Darl? (Score:4, Funny)
Appeal != win (Score:2)
Re:PJ must be relieved... (Score:5, Informative)
Actually, Groklaw [groklaw.com] has begun to deal with other cases of dubious IP claims and attacks on free software, open standards, and so forth, so it will still have a reason for existence once SCO is kaput. The current top article, for example, is about the ISO BRM on OOXML.
Re:PJ must be relieved... (Score:5, Interesting)
The current top article, for example, is about the ISO BRM on OOXML.
I am really amazed that Slashdot hasn't picked up this story yet. I mean, I just can't believe it! This is the story of the week. This is a huge thing, as those who have been following it are well aware. The process at the BRM was so flawed as to bring into serious question the integrity of the ISO/IEC JTC-1. I won't add to the tens of thousands of lines of text that have been written about it here, in fear of being ruled off-topic. I only want to question why this hasn't been aired on Slashdot.
Beginning on Friday, I was scanning the news anxiously to see how the BRM went, and shortly the first reports began to emerge. By Monday, the first report from an actual BRM participant [robweir.com] came out. By Tuesday, the available information was growing exponentially. I was following all this on Groklaw, and kept flipping back and forth from Groklaw to Slashdot to see if they had picked it up yet. When a second blog by Andy Updegrove [consortiuminfo.org] became a resource of links to every report by BRM participants, I could wait no longer. I wanted to see how this story was viewed by my fellow Slashdotters, naturally. I was so concerned that this still hadn't reached Slashdot that I reluctantly submitted the story myself. Then I started backtracking on the Firehose and discovered that there had already been 6 submissions at that point, and that was on Monday. I'll bet there have been dozens by now, besides thousands of people people clicking on those "Submit to Slashdot buttons all over the place". I just can't imagine why the editors haven't put this important story in front of Slashdot readers yet.
Please forgive me for interrupting the current story. I just had to get this off my chest.