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The company, known for its lengthy lawsuits concerning Unix rights, lost a decisive battle mid August when a US court ruled that Novell was the owner of the Unix code. At the same time, the court ruled that Novell was entitled to licensing fees based on its ownership.

Hit by litigation costs, SCO was threatened with NASDAQ delisting in late April; now the Supervisory Board has filed for protection with the court in Delaware. While under court supervision, SCO will have an opportunity to restructure. No debts will be collected in this period, while the court decides whether the company is capable of running economically. The main case in the Novell lawsuit is due to be heard September 17, however, under Chapter 11 the lawsuit will automatically be postponed.

Legal commentators on Groklaw have compiled a list of documents that SCO will be forced to publish under Chapter 11, including the Supervisor Board decision from September 13, and a list of outstanding debts. According to Groklaw SCO has total debts of US$ 7.5 m, but the company is worth US$ 14.8 m in total. The list of creditors does not include Novell's claim for outstanding license payments totaling at least US$ 25 m. SCO's lawyers state that the second largest item is legal fees totaling US$ 287 000, with investment company Amici topping the list at half a million US$. Novell asked the court for a quick decision back in January, stating that its opponent, SCO, would be running out of money soon and would thus be unable to fulfill its obligations.

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