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


Sort of. There's a big difference between secured and unsecured creditors.

At the end of the day, the companies assets are distributed among the secured creditors, and whatever is left over gets divied among the unsecured ones.

SCO's common stock is not secured, so the shareholders would most likely have nothing left to show after the dissolution of the company.

This is why Novell was pushing to court to annex funds from SCO prior to allowing them to file chapter 11; a court order doesn't make them a secured creditor, and they didn't want to see the cash that SCO still had on hand being divied up to anyone else.

It still begs the question, though, of what assets, intangible or not, that SCO is holding and would encourage an investment of this sort. I can't believe that whatever is left of their customer base is worth that much as an acquisition, and I think the courts have nullified SCO's IP claims. Anybody investing in SCO at this point is holding out that they may still have legal fuel left to sue the world. Or somebody is hoping optimistically that IBM will relent and just buyout SCO to make the lawsuit go away, which is unlikely at this point. It's curious.

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.


I don't think SCO had that much in outstanding debt/liability, they could easily pay down their debt, even with Novell and their law firm, and still have cash left over. So something fishy is going on here.

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


Well, that is certainly true, except that all stockholders will probably get the biggest shaft. The smart ones dumped it long ago, anyways, and the execs have either cashed out or probably cut side deals prior to this financing being arranged.

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