York Capital Managements proposed Asset Purchase Agreement and its associated credit agreement for SCO make it clear that if the bankruptcy court lets York buy SCO, that York will be bankrolling SCOs continued lawsuits against Novell, IBM and other Linux-using companies.
York, a private equity firm, is offering a complex purchase agreement for SCO. While the total amount of the deal comes to $36 million, a close 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.
This $10 million “Litigation Credit Facility” is specifically so that SCO can fund the “Specified Litigation.” And what is that? The APA (PDF Link) spells it out: “The IBM litigation and the Novell Litigation and all appellate, supplemental and/or collection proceedings related thereto.” As Pamela Jones, Groklaws editor, aptly described this proposed SCO bankruptcy bailout, “This isnt a reorganization plan. Its York funding SCOs litigation lottery.”
Yorks proposed line of credit is called–and no were not making this up–a Senior Secured Super-Priority Debtor-in-Possession Credit Agreement. What this amounts to is that, in the event that SCO goes back into bankruptcy. York would get its loan money out of what was left of the company ahead of any and all other debtors and without having to go through the bankruptcy courts.