SCO vs. Novell: The Bankruptcy Wars

The first blows are exchanged in SCO's newest legal arena: the bankruptcy court.

Can SCO escape Novells wrath? Will SCO CEO Darl McBride emerge rejuvenated and ready to continue the Linux legal wars by selling SCOs Unix business? These and many more questions will be answered in the next episode of "As SCO Turns."

In our last chapter, SCO appeared in front of a bankruptcy court on Nov. 6, 2007, in Delaware. When the news that SCO was applying for Chapter 11 bankruptcy first appeared, most assumed that was the end of SCO and its seemingly endless lawsuits against IBM, Novell and other Linux-related companies.

Since then, Novell asked that the stay on its case against SCO be lifted. That case, which dealt with which company really owned Unixs IP (intellectual property), was entering its final days in the U.S. District Court in Utah. Since the court had already decided that Novell still owned Unixs IP, there was no doubt that Novell would easily win its last points and that SCO would quickly collapse.

Despite SCOs continued business woes, the company was granted a new chance for life and continued litigation when York Capital Management, a private equity firm, offered a complex purchase agreement for SCO. While the total amount of the deal comes to $36 million, a closer look reveals SCO would get $10 million in cash and what amounts to a $10 million line of credit to use to continue its legal fights with Novell and IBM.

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