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SCO Group Petitions for Chapter 11 Bankruptcy
Posted on Sunday, September 16 @ 02:25:23 PDT by EdisonRex

The Fat Lady is Backstage

In retrospect, this isn't much of a surprise, despite all claims by SCO of solvency. On the eve of its trial with Novell concerning slander of title, which had been so completely gutted by US Federal District Court Judge Dale Kimball as to have only one issue left (how much money SCO owes Novell), SCO whips out a Chapter 11 petition and files it with a new judge in Delaware.

The first effect, of course, is that all lawsuits are put on hold pending the bankruptcy reorganization. So Monday's trial is delayed still further, ironically, by the people who were looking for their day in court. This also means that SCO vs. IBM, SCO vs. Red Hat, and SCO vs. Autozone are all on hold (Autozone hasn't been holding its breath anyway). And SCO wants so many lawyers on its administrative team, it is a wonder that there will be any money left in a couple of weeks, let alone for creditors.

The news has been fairly well reported, so I won't go into too much detail here, but overall, the opinions have been predictable. It seems that SCO has had this gambit up their sleeve all along, There is no way that, just last week, they could have represented to the court in SCO vs. Novell that there was no need for a constructive trust, because they had no intention of going bankrupt, and then suddenly whip up 11 filings (worth around $80,000 in legal fees) just a few days later. One can reasonably expect that none of the legal teams for the opposition were fooled.

So what happens next? There will be a hearing in Delaware on Tuesday. If Novell doesn't show up to that, be very surprised. Novell is not a creditor. SCO is already shown to have stolen ("converted") Novell's money for Unix license fees, and if you rob a bank and then claim bankruptcy to keep the money, it doesn't work that way, the money isn't yours in the first place. Of course, going into bankruptcy as a strategic move to delay that particular judgement is what you pay people like Boies Schiller and Flexner for in the first place, it is a very high stakes maneuver with some possibly very high stakes penalties.

The bankruptcy has not been granted yet - remember that. There is a hearing Tuesday to determine whether or not they will be allowed to reorganize under Chapter 11. That judge could tell them no, but you can be certain it won't happen on Tuesday.

The poor fat lady will have lost all her weight and be a waif when she finally is allowed to sing. But she's going to sing, oh yes she will.



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