SCO has its first bankruptcy hearing

THE FIRST HEARING on SCO's Chapter 11 bankruptcy petition was held this morning in US Bankruptcy Court of Delaware, located in beautiful downtown Wilmington. A few Groklaw members attended the hearing and Pamela Jones has already posted their first notes and impressions online.

SCO had filed for Chapter 11 bankruptcy last Friday. This morning's hearing was SCO's opportunity to argue that it is eligible for court protection during reorganisation under Chapter 11. It was also the first appropriate time for any of SCO's creditors not listed in its initial bankruptcy filings to appear and be heard by US bankruptcy judge Kevin Gross.

Chief among SCO's unlisted creditors is Novell, which Judge Kimball of the US District Court in Utah ruled last month is due payment of up to $37 million in UNIX SVRX licencing royalties that have been improperly withheld by SCO.

As expected, Novell was indeed in attendance. It assigned five attorneys from the law firm of Morrison & Foerster to attend, two of them partners. Morrison & Foerster is a such a scary, competant litigator that it is known as "mofo" and proud of it - even its website address is www.mofo.com.

However, those hoping for a display of fireworks at this first hearing were disappointed. Not much happened.

The judge treated SCO more or less just like any other first day corporate Chapter 11 petitioner, by all accounts. He left SCO's management in control of the company as debtor in possession, subject to the supervision of a US Trustee, and otherwise followed the normal, routine Chapter 11 process.

Novell brought up Judge Kimball's ruling that SCO should have paid it millions for UNIX SVRX licence royalties and it requested a constructive trust to safeguard its money. But Judge Gross declined to order that, saying that if he granted the trust on the basis of what Novell had just presented, that would be giving Novell preferential treatment.

However, he did invite Novell to present a motion to lift the stay of the SCO v. Novell trial. Novell said it would file that motion and come back before him to argue it, if need be. So, it looks like the SCO v. Novell trial might proceed after all.

It's still early going in SCO's bankruptcy. This will get much more interesting later, we reckon. µ

L'INQS
Groklaw - The Bankruptcy Docket & All Filings...
Groklaw - SCO Files For Chapter 11 Bankruptcy...

See Also
Suspense builds ahead of SCO's bankruptcy hearing
SCO files Chapter 11 bankruptcy
SCO's Darl McBride remains defiant
Countdown starts to SCO v. Novell trial
Rats leave SCO's sinking ship
Novell wins Unix victory over SCO