Sunday, June 14, 2009

 

chapter 7 (?) mini-preview (?)

So tomorrow there'll be a big hearing on whether to convert SCO's interminable Chapter 11 bankruptcy into Chapter 7 liquidation. The US bankruptcy trustee has requested this, as have Novell and IBM. SCO opposes the motions, for a variety of spurious, irrelevant, and ludicrous reasons. SCO's argument, in essence, is that they're just weeks away from a glorious victory on their appeal of the Novell case. (Ok, yeah, I neglected to cover the appeal here. I didn't see it as that big of a story, quite honestly, merely the latest way for SCO to drag things out a bit longer.) Anyway, they're supposedly this close to crushing Novell on appeal, and as soon as that inevitably happens they'll have countless gazillions at their disposal, so the court should grant them an extra stretch of delay, no matter what BK law technically requires. And if they get that, no doubt they'll need more delay when the case goes back to Kimball for basically a complete do-over. And for any appeals that results in, plus any appeals to the Supreme Court, plus any do-overs from there, plus delay due to any other court cases -- IBM, Red Hat, AutoZone, whoever.

I'm reluctant to make any predictions. I think I said I wasn't going to make any more predictions about what the BK court was going to do, since I don't have any insight into that particular universe. On one hand, I can't see how the court could possibly rule in SCO's favor. The BK trustee has asked for Chapter 7 conversion, and under the law these days -- as I understand it -- the judge has to either grant that or dismiss the BK case entirely. That seems about as clear-cut as federal law ever gets. On the other hand, given SCO's track record it's hard to bet against them when they're angling for further delay. It doesn't always work, but it's worked enough, such that it's mid-2009 and we've still got friggin' SCO to kick around.

One amusing aspect to SCO's opposition is the nano-deluge of letters and motions in support they've drummed up. Their filing includes a letters from a few of their remaining Unix customers, explaining that they might be inconvenienced, in theory, if SCO went away, assuming nobody buys the Unix business from the Ch. 7 BK trustee. The court also got a separate letter from Herb Jackson of Renaissance Ventures (or was it Renaissance Capital, or Renaissance Partners, I can't recall at the moment). He was a SCO true believer way back in the beginning, and apparently he's spent the last few years quietly watching his investment evaporate, but still never wavering as a SCO True Believer. Which is really sad, if you ask me. And on top of that, it seems that tomorrow we'll see an appearance, or attempted appearance, by lawyers for the latest Norris shell company, something called "Gulf Capital Partners", or something along those lines. Which, according to info on IV, employs one of the same DC frontmen as our old friends at the Alexis de Tocqueville Institute, of "Samizdat" fame. It's almost like SCO's already rolling the credits, and everyone who ever worked on their behalf gets to be in on it. I suppose next we'll hear from that analyst whose name I forget (Skiba?), still standing by his $45 per share prediction for SCO, due just as soon as they get that elusive courtroom victory. Maybe we'll see new FUD from DiDio or Enderle or even Lyons again, or possibly MOG / G2 will try to "intervene" in the case. If the current trend continues, maybe we'll even hear from Baystar, begging the court to let events play out so maybe they'll get some of their money back. Who knows?

I do suspect there will ultimately be a ruling against SCO, but it may not be tomorrow. And whenever that happens, it's still not The End. First, as you might imagine, there's an appeals process in BK court, just like there is in regular federal court. My understanding is that cases go next to a BK appeals panel of three judges, and from there to the regular US Court of Appeals, and from there to the Supremes. And (if SCO wins at the Supremes), all the way back down, and in semi-parallel the Novell case also gets appealed to the Supremes if SCO doesn't win in Denver, and in another 5-7 years it all ends up back in Kimball's lap, unless he retires before then. And if, on the other hand, the case proceeds to Chapter 7 and current SCO management is quickly kicked to the curb, we're still not out of the woods. One would assume that a rational BK trustee, like any rational person, would realize that the SCO v. Universe cases are without merit and settle them ASAP. But we don't actually have any guarantee of that. We may get a non-tech-savvy one who doesn't get it but just sees big dollar signs, and SCO v. Universe then proceeds under new management. I'd hate to see that, but I can't rule it out.

I'll try to do a post-hearing post if anything dramatic happens. It would be a shame not to, even though I'm not as wound up about the SCO saga as I once was (in case you hadn't noticed).

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