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08 March 2010, 10:23

SCO vs. Linux: The trial can begin

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The SCO Group is to receive 2 million dollars from a group of investors headed by majority shareholder Ralph Yarro. Following an oral hearing, the Delaware bankruptcy court dealing with SCO has approved the loan. This means that the company now has sufficient funds for the pending jury trial against Novell. The trial, which is to address rights to Unix and the legality of protective licences for Linux users, is set to start today and is expected to last three weeks.

At the hearing, SCO was able to persuade the judge that the loan offered by a group of investors headed by Ralph Yarro represented the best of twelve offers. The injection of funds will incur interest at 6.6 per cent, which compares well with one competitor offer which set out an interest rate of 10 per cent. That offer would also have seen charges imposed for setting up the loan – the Yarro offer does not impose set-up charges.

As well as the details of the loan, SCO presented a two-part business plan for the next 13 weeks developed under administrator Edward Cahn. The two parts are the software business, which is generating revenues, and the litigation business, which has so far generated only costs. Without the loan, it would, according to Cahn, not have been possible to continue litigation. Once the trial between SCO and Novell ends at the end of this month, SCO will have sufficient funds to repay the loan – assuming it wins the case. Regarding further restructuring of the troubled company, Cahn also told the court that he had visited the company's subsidiaries in the UK and Germany and it should soon be possible to close these down. The bankruptcy court approved the transactions.

(Detlef Borchers)

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