| Another SCO buyout stumbles |
Apr. 03, 2008
Like the 11th chapter of a bad horror movie, the SCO zombie keeps stumbling forward moaning "Linux," instead of "Brains." This time, however, there may not be another movie left for SCO. SCO's most recent would-be buyer, Stephen Norris & Co. Capital Partners LP, no longer wants to buy SCO.
SCO has staggered on since August 2007, when the U.S. District Court in Salt Lake City ruled that Novell, and not SCO, owned UNIX's intellectual property Thus, with the legs cut out beneath all of its Linux cases, SCO filed for Chapter 11 bankruptcy in mid-September 2007.
In late October, SCO claimed it had found a buyer, York Capital Management. That proposed deal fell apart barely a month later. By year's end, SCO had dropped off the Nasdaq.
You'd think that would be the end wouldn't you? No case, no money, no buyer, and no more stock market presence. You'd think that would be the end wouldn't you? Alas, no. On Valentine's Day, SCO showed that even it could still get a little fiscal love—up to $100 million worth if you count the credit line—from Stephen Norris & Co.
In return for $5 million in cash, and loans of up to $95 million, Stephen Norris would buy SCO, move the company out of bankruptcy, take it private, and, of course, continue its seemingly endless and pointless Linux litigation.
It wasn't a done deal, although SCO's ownership agreed to both sell the company and fire long-time CEO Darl McBride. First, the proposed sale had to pass the scrutiny of the U.S. Bankruptcy Court in Delaware.
The deal didn't make it that far. At the Bankruptcy Court on April 2, according to a report by Steven Church of Bloomberg News, SCO attorney Arthur Spector said that now the Stephen Norris deal was off. "We don't have a new deal. But, when we get the deal that we think we are going to get, it's going to be better."
Instead of buying SCO, the company, Stephen Norris & Co. now wants to buy the Lindon, Utah's business assets. Of course, the largest remaining question in both Novell's lawsuit in Utah and in the Delaware bankruptcy court is what assets, if any, the company has left and who legally owns them.
In short, what could SCO possibly have left to sell that could, according to a report in Groklaw, leave SCO with "plenty of cash to pay their creditors with interest and have cash or cash reserves for paying future debts"?
There were no details given about this latest proposed deal. The Groklaw on-the-scene report continued that SCO's attorney said he was "waiting until the deal is done before making full disclosures. He's not going to leave any loose ends this time. He mentions that SCO may need an extension to get everything prepared and do due diligence."
The Groklaw report also stated that, Joseph McMahon Jr., an attorney with the U.S. Trustee's office, said "that the former York deal was basically a plan to sell IP that they [SCO] didn't own and he wants to make sure that this new deal is clear about what is being sold since it is an asset purchase."
So it is that, now without a deal in place, SCO continues to stumble forward. Whether the company will still be around to make its next court date remains an open question.
—Steven J. Vaughan Nichols
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