I posted in September about SCO's attempt to
avoid paying Novell by declaring bankruptcy. During that time they have acknowledged that there is a ruling which says they owe money (which they intend to appeal) but that money is all spent, so Novell cannot be considered a creditor. They also tried to sell off the assets and liabilities to a stalking horse private equity firm, which has since been quashed.
SCO has now been told that they must
return to Utah to face the music. The lawsuit they raised against Novell was dismissed some time ago, but the countersuit by Novell was found against SCO. The ruling had been given, but the amount had not been decided before a carefully timed bankruptcy filing halted proceedings. SCO was using bankruptcy law to prevent Novell from proceeding to award, and to avoid having to list them as a creditor.
The asset sale they tried to perform was squashed after every interested party in the SCO bankruptcy case objected vehemently, and now the bunkruptcy judge has ruled that the award part of the Utah trial must go ahead so the amount they owe to Novell can be included in discussions there.
This is a killing blow for SCO. Even though they have declared bankruptcy they are solvent. The only reason i can see why they declared was to prevent the Utah courts coming to an award decision in that trial. Their desperate gambit appears to have failed. The award from the Novell trial will likely be greater than their current assets, effectively killing them. Even though they have a chance to appeal the decision, SCO is bleeding money and would be unlikely to last very long.
Once this award has been decided this will all come back to Delaware. I would not be surprised if at that point the administrator doesn't move to close SCO down and for the court to sieze and sell the assets to be returned to debtors. It is highly unlikely that there will be anything left at the end of this to return to shareholders. I don't feel bad for the opportunists who invested in the hope SCO could strong arm IBM into a settlement, but there are people working at SCO who have had nothing to do with this strategy and may be losing money they can't really afford to lose.
The executives of the company will get to walk away without much impact. Even if they do feel the occasional pang of guilt they will believe that they were acting in "the best interests of shareholders". meanwhile many people will have lost their jobs at a company that could have still been operating, or saleable as a going concern. I wonder if anyone is running a book on the last trading day for SCO. I'll take $10 on April 1 just for the potential irony.
