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The Order - A Chapter 11 Trustee is to be Appointed; SCO's Sale Motion Denied

By Pamela Jones et al.

The judge in the SCO bankruptcy has ruled at last. SCO's motion to let it sell to unXis is denied. There could be an auction later. The motions to convert to Chapter 7 by IBM, Novell and the US Trustee's Office are also denied, but alternative relief is granted, and there will be a Chapter 11 trustee appointed. That means presumably that SCO management no longer run this show. Here they are, the Order and Memorandum in the bankruptcy:

890 - Filed & Entered: 08/05/2009
Opinion
Docket Text: OPINION re Motions to Convert and Sale Motion(related document(s)[750], [751], [815], [881]) (LJS)

891 - Filed & Entered: 08/05/2009
Order
Docket Text: ORDER DENYING Motions to Convert and Sale Motion(related document(s)[750], [751], [815], [881], [890]) Order Signed on 8/5/2009. (LJS)

The judge leaned as far as he could to help SCO, denying the three motions to convert. But the U.S. Trustee's Office will now appoint a Chapter 11 trustee. SCO has "abandoned rehabilitation", the judge says, and bet the company on its litigation, so the Chapter 11 trustee will evaluate whether the litigation is realistic or not. The judge doesn't trust anyone not to have an agenda, so he wants a trustee, but he is clearly trying to help SCO survive. And footnote 6 of the memorandum says this about the sale:

After the Hearing, Debtors wrote to the Court to report that Debtors were now prepared to 6 subject the Sale to an auction, under the auspices of an examiner. The Court's ruling means a trustee will review the Sale Motion and take independent action as a fiduciary.

Sigh. The memorandum misspells the proposed buyer, mischaracterizes the Novell litigation, etc. But there is now going to be an independent fiduciary to run the show. At least. But the judge says even if he had a trial on the litigation, he could only guess as to the outcome. So how can an independent fiduciary do any better without even a trial? You tell me.

Full post as published by Groklaw on August 05, 2009 (boomark / email).