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08 August 2012, 14:58

SCO vs Linux: Last chance Chapter 7

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At the bankruptcy court in the US state of Delaware, SCO successor The SCO Group (TSG) has filed for the reorganisation according to Chapter 11 to be converted into a liquidation under Chapter 7. TSG says that its decision is based on its latest business report. According to this report, the company has $3.7 million in liabilities and only $145,000 in assets. Under Chapter 7, all payments are planned to be suspended while awaiting the last pending decision in the dispute with IBM before the company is dissolved.

Legal observers at Groklaw report that TSG's petition asks for Chapter 11 trustee Edward Cahn to be the new Chapter 7 trustee. According to the petition, the company has no chance of "rehabilitation" because all assets have been sold and there are no continuing business operations. When SCO became TSG, the Unix licence business was split off and has since been handled by the UnXis Group. "There are no other assets in the Debtors' estates other than certain unfair competition and (tortius interference claims) asserted by the Debtors' estates against International Business Machines Corporation ("IBM") in an action ("District Court Action") currently pending in the District Court for the District of Utah (the "District Court")."

SCO became infamous with its threat to charge Linux users a licence fee, with its litigation against IBM about Linux code that was allegedly stolen, and with its legal disputes with Novell over the copyright to Unix System V. Whether the responsible District Judge Gross will grant the petition to convert the bankruptcy proceedings depends on what he thinks the company's chances are in the court case that has now been pending for nine years and which was postponed in favour of SCO's litigation against Novell.

In March 2003, SCO sued IBM for $1 billion in damages for the alleged devaluation of Unix; in June 2006, it extended its claim, saying that damages were also due for all AIX installations, which it deemed to be "non-authorised copies of Unix". In September 2007, proceedings were postponed by Judge Kimball, who presided over the dispute between Novell and SCO. At the time, Kimball ruled that the litigation against IBM could only be resumed once SCO had concluded its Chapter 11 bankruptcy proceedings and the company's finances been rehabilitated.

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