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29 July 2009, 16:59

SCO vs. Linux: Forget Hans Bayer!

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SCO.png The court proceedings concerning the bankruptcy of the SCO Group were finalised on Monday with a 12-hour marathon hearing. The judge's ruling is expected in about a week. A surprising aspect of the hearing was a controversy that developed around the role of SCO's Vice President Hans Bayer, the former CEO of SCO Germany. This was sparked off by the question of which of SCO's business divisions possess any economic value that could be salvaged via ordered bankruptcy proceedings.

According to members of Groklaw present at the hearing at the Delaware Bankruptcy Court, both SCO's legal team and SCO CEO Darl McBride painted a rosy picture of the company's future if the group of investors centred around Steven Norris gets the go-ahead and UnXis can take over the operating system division. A study created by Steven Norris and apparently funded by SCO Japan reportedly states that there is a demand for Unix systems in emerging countries like Russia, China and Brazil. McBride also sees good prospects for the mobile application business, especially because SCO has reportedly just passed the 10,000 customer mark. During cross-examination, McBride was confronted with with Hans Bayer's assessment, which Bayer is said to have stated in an email. According to this, the mobile business is insignificant and "weird", while the Unix business has potential for expansion. McBride responded by classifying Hans Bayer's role as that of a "German sales guy" and of little importance, while SCO's legal team managed to convince the judge that the email statements should be excluded from the case as being based on hearsay.

The strategy of simply sending a vice president off the pitch because his assessment of the mobile market is not in line with official company policy, comes as a surprise. After all, Hans Bayer is informed about the UnXis strategy, and the domain has already been registered. Another inconsistent statement was made in court by investor Seven Norris: He stated that his negotiations about the future UnXis business were with Hans Bayer.

More irritation was caused by other statements made by Steven Norris, as well as by SCO and future UnXis executive Jeff Hunsacker. Both apparently said that the future UnXis Unix distribution company has no interest in the legal proceedings concerning the remainder of SCO. This predominantly refers to the litigation cases with IBM, Novell and Red Hat about copyrights to Unix and about Unix code and Unix processes that were allegedly transferred to Linux. The statements directly contradict clauses of the Asset Purchase Agreement (APA). Paragraph 12.2 and 12.4 of the purchase agreement state that the seller (SCO) commits to continuing the litigation with Autozone, IBM Novell and Red Hat. If the seller doesn't act in good faith, the purchaser (UnXis) is entitled to take over the fight for SCO's intellectual property rights, following a written warning and a 30-day period.

Now that the 12-hour hearing is complete, the bankruptcy judge has several options. He could liquidate SCO according to Chapter 7. He could also appoint an independent receiver to handle the business administration of SCO according to Chapter 7 or Chapter 11 of US bankruptcy law. This would mean that SCO boss Darl McBride loses control of the SCO Group and has to hand over all business papers, most of which are currently classified as secret. Also possible is a ruling that forces SCO to sell or auction off individual business divisions. This would allow the legal disputes sold to third parties to be continued while SCO itself is in administration.

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(Detlef Borchers)


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