SCO files for Chapter 11

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SCO has filed a voluntary petition for reorganisation under Chapter 11 of the US Bankruptcy Code.

The Utah-based firm says its filing will protect shareholders as it cash reserves run low as a result of its long-running Unix copyright battle with Novell.

The vendor released a statement in conjunction with is filing late last Friday. "The board of directors of The SCO Group unanimously determined that Chapter 11 reorganisation is in the best long-term interest of SCO and its subsidiaries, as well as its customers, shareholders, and employees," it said.

But it added that it expects business to continue as usual throughout the bankruptcy proceedings.

The filing does however put legal proceedings in the Novell case on hold, despite the fact they were scheduled to recommence today with the beginning of the trial proper.

Last month the judge presiding over the copyright case found that Novell is the owner of the Unix and UnixWare copyrights, dismissing SCO's charges of slander and breach of contract.

According to the vendor's last financial reports filed in June, it had $13 million (£6.5 million) in the bank, but had set $5.5 million of that aside to cover costs of the Novell legal battle and royalties.

Pamela Jones, editor of open source legal blog, Groklaw.net commented: "Novell sure has had to work hard for their money. And now they will have to row the boat that little bit harder. And for those of you who bought airline tickets to go to the trial, get on the phone or online fast and cancel."

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