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19 February 2010, 17:08

SCO vs. Linux: SCO majority owner wants to finance SCO

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SCO Linux Teaser In the dispute between the SCO Group and Novell about the copyright for Unix, the new jury trial scheduled to begin on the 8th of March is apparently set to go ahead: according to a statement by Chapter 11 trustee Edward Cahn, SCO's majority owner Ralph Yarro wants to inject a loan of $2 million dollars into the financially stricken company.

Legal observers at Groklaw reported that Ralph Yarro intends to finance the loan via his investment company, Seung Ni Capital Partners. The loan is termed to run for a year at an interest rate of 6.6%. SCO will have to repay the loan before settling its other open debts. Among these is a court order to pay $2.5 million to Novell. Earlier, trustee Cahn had told the bankruptcy court that SCO was in urgent need of further funding if it was to survive the new trial. The trustee said that without further funding he would not be able to continue SCO's business.

SCO had repeatedly tried to find investors for the pending trial. For instance, there were talks with Middle Eastern company Gulf Capital Partners and with London-based investment firm Merchant Bridge. The investors were to finance a company called UniXis, which is taking over SCO's software business.

The court responsible for the SCO vs Novell lawsuit is currently investigating the question of which of the charges to try before the jury and which of them to drop. This will be clarified in a last hearing scheduled for the 25th of February. Both Novell and SCO have submitted numerous motions about what they think should be tried. One important point has already been clarified, as the responsible judge has denied the motion by Novell to exclude the slander of title claim from the new trial.

The legal observers at Groklaw are currently having fun with an expert report. In his report, Professor of Business Administration at Harvard University, Gary Pisano, examined the alleged financial damage SCO suffered after Novell, like Hewlett Packard before it, announced that it would protect its customers via a Linux Indemnification Program at the beginning of this never ending story. Pisano said that after the announcement the sales of the license that SCO was trying to use to extract money from corporate Linux customers collapsed. According to Pisano's calculations, SCO is entitled to up to $25 million dollars in damages for the lost revenue.

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