Novell Claiming Payment from SCO

Oct 07, 2007

In the current bankruptcy proceedings, Novell has filed a claim against SCO for payment of outstanding license fees and is seeking to have the proceedings moved to Utah.

In its motion to compel Novell informs the court that it claims all future income from SVRX licenses, and that this income should not become part of the estate. Otherwise, says Novell, SCO might "improperly use Novell's property to fund SCO's bankruptcy." SCO applied for protection under Chapter 11 September 14 (as Linux Magazine reported). In its statement, Novell points out to the court that SCO took this step just one workday prior to the opening of a five-day hearing at the court in Utah. In this case, Judge Kimball decided that the Novell was the owner of the contentious Unix rights and had ordered SCO to pay at least US$ 25 m in outstanding license fees. The filings that SCO is required to publish under US creditor protection law did not include the payments to Novell.

As Groklaw observers see it, Novell should be able to enforce its rights and collect the license fees directly. Novell is also cited as saying that anything else would "turn Novell's property into an involuntary gift to the estate and its creditors." Novell is now trying to take the proceedings back to the court in Utah, and reserves the right to take further steps against SCO because it believes that "that SCO's Chapter 11 cases were filed in bad faith." To substantiate this claim Novell's lawyers state that the trial in Utah was approaching its conclusion after four years, and that all parties were familiar with the facts and issues. At the same time, the bankruptcy court in Utah would be in the best position to ascertain SCO's estate. Novell views itself as SCO's biggest creditor and states that it would be interested in finding out exactly how much of SCOs previous earnings was based on misuse of SVRX rights."

In an initial list, SCO declared debts of US$ 7.5 m compared to corporate assets of US$ 14.8 m. Amici was quoted as the largest creditor with a sum of less than half a million dollars, with the second highest item on the list being SCO's legal fees in the amount of US$ 287 000.
Groklaw observers have collected numerous documents on the case, including the claims.

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