SCO vs. Linux: SCO gets Chapter 11 trustee

A Chapter 11 trustee has been commissioned to take over the business affairs of the SCO Group, which is threatened by bankruptcy. The trustee will work to guide the company out of the impending bankruptcy according to Chapter 11 of US bankruptcy code, but can also send the company into liquidation according to Chapter 7 and auction individual company assets to the highest bidder. With this order, the Bankruptcy Court in Delaware has removed SCO's executive board.

Bankruptcy judge Kevin Gross made a number of important decisions with his order. For instance, he determined that SCO's main business does not lie in mobile applications or the sale of Unix software, but in the pending litigation against Novell, IBM, Red Hat and others. Gross therefore denied the motions of Novell, IBM and the US Trustee to liquidate the SCO Group: According to the judge, the motion was motivated by the two firms' mutual interest to remove a legal opponent out of court, rather than by their financial interest to recover active debts. On the other hand, the judge barred the SCO Group from selling its Unix system division, which was due to be taken over by a company called UnXis.

In his memorandum opinion, the bankruptcy judge painted a picture which should please the SCO Group. According to the judge, SCO took over a flourishing Unix business from Novell in 1995. The memorandum speaks of "the world's most successful operating system." In reference to SCO's claims, Gross writes that this business was destroyed by IBM: "SCO claims that IBM breached its UNIX source code licenses by disclosing restricted information in connection with IBM's efforts to promote the IBM Linux operating system."

Following this order, Chapter 11 requires the trustee to pursue and finance SCO's business activities and especially its pending litigation cases. However, appeals against the decision are possible and will probably be made by Novell and IBM. The two vendors have not issued any statements. In an interview with the Salt Lake Tribune, SCO was pleased that the motion to liquidate immediately according to Chapter 7 was denied.

(Detlef Borchers)

See also:

• SCO vs. Linux: The story so far, a summary of all the SCO vs. Linux reports from The H.

(djwm)