Linked by Thom Holwerda on Thu 14th Feb 2008 21:06 UTC
SCO, Caldera, Unixware Having almost disappeared completely late last year, SCO says it has been resuscitated by a new financing plan. Under the terms of the deal, Stephen Norris Capital Partners and "its partners from the Middle East" will supply up to $100 million, enabling SCO to reorganize and launch a new series of products. SNCP will gain a controlling interest in the company, and take it private, allowing it to slip out of Chapter 11 bankruptcy protection. Update: As part of the reorganisation, Darl McBride will be let go. Buried in the proposed MOU (Memorandum of Understanding) between Unix vendor and Linux litigator SCO and SNCP is the note that "upon the effective date of the Proposed Plan of Reorganization, the existing CEO of the Company, Darl McBride, will resign immediately."
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Why do I have a feeling that due to some loophole, they are no longer in bankruptcy protection, but still not obligated to pay back any of their former debt (ie. to Novel)?

Basically when a company files for bankruptcy protection, anyone that has any monetary interest in that company becomes a creditor (including the stockholders).

While in bankruptcy protection, these creditors are basically involved in negotiations with the court and the company to come to an agreement on how the company will emerge from bankruptcy. In many cases, the biggest creditors end up becoming partial owners of the company based on the amount they are owed - other times they simply remain a creditor once the company emerges.

My guess is that the $100M is primarily being used to payoff some creditors - possibly for amounts quite a bit smaller than was owed (this is usually part of the negotiations). This will allow SCO to emerge without fear of being sued and liquidated into oblivion by their remaining creditors.

It can be different for any scenario - in the end, SCO will be privately held, and the smaller stockholders will get the biggest shaft.

edit: clarification

Edited 2008-02-14 21:54 UTC

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