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Novell's Objection to SCO's Motion to "Reimburse" York, as text

By Pamela Jones et al.

Here is Novell's Objection to SCO's Motion to Approve an Expense Reimbursement to York [PDF] as text. The document when filed referenced an April 2nd hearing date, but as you know it was delayed until April 18th, and then SCO asked for another delay until the May 15th omnibus hearing. That means it won't be heard until after the SCO v. Novell trial, which might very well result in SCO having no money to give to York or in fact to anyone but Novell. In that sense, the delay makes sense, because no one, including SCO, knows what the outcome of that trial will be.

The objection is filed by Novell and its subsidiary, SUSE Linux GmbH. Clearly, they don't believe this SCO motion has a prayer of being granted, and they mince no words:

Last Winter, the Debtors asked for just such relief for York Capital Management ("York") in connection with their "emergency" motion to approve bidding procedures for a proposed sale of substantially all their assets to York, but they withdrew the request because they never did reach any kind of sale agreement with York. No matter, it seems, for now the Debtors seek an expense reimbursement for York anyhow. This request is a vintage performance by the Debtors in these cases, except that this time they seek to make an outright gift of the estates' assets rather than approval of just another really bad deal they have chased in ceaseless pursuit of their dreams of a litigation bonanza against Novell and others. The Court should deny the Motion....

The Motion clearly fails to meet the standards for approval of a breakup fee or a section 363(b) sale. There has been no benefit to the Debtors' estates. York's participation in the process did not attract any other bidders; indeed, it did not result in a sale to anyone, including York. In fact, it did not even result in signed contract between York and the Debtors. In fact, to the contrary, all that happened is that the Debtors spent money needlessly on a proceeding that was, to all intents and purposes, stillborn had it not been for the stubbornness of the Debtors' management and the avarice of York....

Under these circumstances, moreover, the Motion reflects not sound business judgment, but a total lack of any judgment at all. No debtor can make a gift of estate money such as the Motion effectively represents.

The way SCO spins these reorganizations to the media, you might get the impression, and a few in the media have, that a reinvigorated SCO is ready to get back in the ring with buckets of fresh money and renewed strength as a consequence. But if you read what is actually happening with these proposed deals in court, it's a very different story.

Full post as published by Groklaw on April 28, 2008 (boomark / email).