updated 04:45 pm EDT, Tue September 18, 2007
SCO May Die
The SCO Group may disappear altogether in the wake of the company's bankruptcy, according to the company's latest Securities and Exchange Commission filing. The company reported that there was "substantial doubt" it would survive after losing its patent dispute with Novell over Linux and facing a similar, impending challenge with IBM, both of which will deprive the company of the money it was hoping to collect. The Linux licensing program SCO had hoped to use to pressure Linux-using organizations into paying royalties was completely unsuccessful, according to the filing.
The preemptive move to Chapter 11 bankruptcy may therefore have been a last-ditch attempt to stave off the complete demise of the company, says GrokLaw legal expert Peter Salus. As part of SCO's defeat by Novell in August this year, the company is said to owe $30 million to Novell for deals struck with Microsoft and Sun during its attempts to charge for Unix-related licenses -- a figure which is roughly three times the $10 million in cash SCO has to offer. Bankruptcy may at least temporarily delay a shutdown by preventing creditors such as Novell from collecting on their debt, though the latter company appeared in court today demanding payment and was only denied the establishment of an initial trust to hold money owed by SCO.
"I gather SCO believes the only way to keep going is to stiff Novell," Salus says. "But I question if that is going to be possible."