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Ralph Yarro, SCO's "former Chairman" wants to loan SCO $2M

By Pamela Jones et al.

You've been expecting this, I'm sure. Ralph Yarro wants to loan SCO some money, $2 million, or more accurately up to $2 million, and the SCO trustee, Edward Cahn, wants to let him. It's all at "arm's length" and "in good faith" negotiations with this SCO insider, don't you know. So, does this mean nobody else wants to fund SCO? No potential buyers? Just Ralph? And Cahn asks the court to please shorten the time to handle the motion. Is SCO on its last legs or something?

The motion calls Yarro the "former Chairman" of SCO's board of directors. See all the stuff you can hide if you don't file MORs or with the SEC, despite being a public company? Say, didn't Cahn promise to file those MORs by now? What, they look too awful? Still, they're supposed to be filed. Well, well. SCO's MO seems to be catching. Delay, delay, delay while they keep their greedy hand reaching desperately for the brass ring.

"The Trustee is advised that Seung Ni Capital Partners, L.L.C. is a newly formed entity formed by Ralph J. Yarro III ("Yarro") and was created for the purpose of providing postpetition financing to the Debtors. Since Yarro is the former Chairman of the Debtors' Board of Directors and the Debtors' largest shareholder, Yarro is an insider pursuant to Bankruptcy Code section 101(31). See 11 U.S.C. § 101(31). The Trustee represents that at all times the negotiations among the Trustee, his advisors and Yarro were at arms-length and in good faith."

Wait. Look at page 2. It's a loan from Ralph in public and "other lenders from time to time". Uh oh. Page 3:

9. In accordance with the Credit Agreement, additional Lenders may also make loans to the Debtors under the Credit Facility from time to time.

Not another weirdo deal with shadows... Remember the York deal in 2007, speaking of shadows? It was a Super Dooper Senior Secured Super-Priority Credit Agreement too. We'd better look at the exhibits, which set forth the precise terms. I'll swing back by after I do that. My opinion of Judge Cahn sadly just went down a considerable peg. He's become an enabler now in my view, and while you don't despise a wife for being married to a drunk, if she buys the booze and covers for him when he's too drunk to go to work, is she not making herself part of the problem? The only thing that ever helps an alcoholic is to confront the consequences of what he's done, so he can get in touch with reality.

Full post as published by Groklaw on February 18, 2010 (boomark / email).