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07 August 2009, 15:01

SCO vs. Linux: an end in sight?

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Following the bankruptcy court's decision to entrust the continuation of SCO Group's business to a trustee, there's been a lot of head-scratching over the future of the company. Judge Kevin Gross has yet to appoint a trustee to take the reins at SCO and the Office of the United States Trustee Program has yet to propose someone who will be acceptable to all sides to fill the post. Whoever is appointed, going by the judge's very clear statement on the matter, is likely to have little room to manoeuvre:

"It is an understatement to say that since the filing of their bankruptcy the Debtors financial situation has greatly declined. Their own Operations Monthly Operating Report for March 31, 2009, the latest Monthly Operating Report which Debtors have filed, shows that Debtors have lost $8,652,612 since filing, without taking into account reorganization costs. These losses compare to total assets of $8.3 million of which there is $728,537 of unrestricted cash and net accounts receivable of $1.4 million."

The SCO Group, which, following a courtroom defeat, in September of 2007 sought sanctuary in chapter 11 of the US bankruptcy code, is, in the assessment of the bankruptcy court judge, practically bankrupt. There is disagreement over what a trustee will be able to achieve in this situation, but there is consensus that full access to SCO files and the removal of the management team led by CEO Darl McBride may offer a chance for a fresh start. It's also conceivable that the trustee will recommend liquidation under chapter 7 which would then require the judge's approval. Certainly the trustee will need to make an objective assessment of SCO's chances of winning its dispute with IBM and Novell – he'll be the first person outside of SCO to have full access to the "secret evidence".

"The 'potential' of the Litigation must, however, be weighed against the reality of the cost. A trustee will be in a better position to make that assessment without the personal and emotional investment of SCO's management."

McBride and his advisers appear to have become emotionally fixated on the idea that IBM took source code or general concepts and methods from Unix development and fed it into Linux during work on Project Monterey. SCO's purchase of the distribution rights to Unix from Novell is also seen in very different lights by the two companies on either side of the transaction. At the end of the day, as well as going through the books and assessing confidential documents, the trustee will also have to give his assessment of whether Linux in all its various flavours has grown through the theft of intellectual property and if this might form the basis of a suite or suites. This won't be an easy task.

(Detlef Borchers)

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