SCO motion paves way for 'potential' suitor

The fortunes of embattled UNIX vendor SCO have taken another turn this week, as it filed a motion to pave the way for a potential takeover with the court hearing its Chapter 11 bankruptcy case.

The motion, filed late Tuesday with the Bankruptcy Court of Delaware, said the Utah-based firm had received a "potential" $36-million (£17.6-million) offer for its UNIX business from JDG Management Corporation, which is part of New York-based investment firm York Capital Management.

According to the motion, the bid is for SCO's entire UNIX business, as well as its related litigation claims and expenses. But the offer makes the proviso that it excludes the "seller's litigation with Novell and IBM and its claims and choses in action other than the Linux Litigation".

In August, the judge presiding over SCO's long-running lawsuit brought against Novell, IBM and others, found in

favour of Novell as the owner of the UNIX and UNIXWare copyrights. And it dismissed SCO's charges of slander and breach of contract, effectively killing off the case that vendor has ploughed most of its resources into since it began in 2004.

This week's filing said the bid is subject to the approval of the Delaware court and, if successful, would not preclude competitive bids from other interested parties.

The acquisition move has been said by those watching SCO's legal manoeuvrings to be a way for it to stay in business amid mounting expenses and the potentially terminal financial implications of the UNIX lawsuit rulings.

And yesterday, the presiding judge signed an order to schedule a hearing on 6 November, when both SCO's motion to sell and an argument over whether or not to lift the stay on Novell pursuing damages will both be heard.

Pamela Jones, editor of open source legal blog Groklaw commented: "A lot depends on what happens on November 6. If SCO gets the judge to rubberstamp the plan and the auction/sale happens, I don't really see how anyone gets paid, other than York, SCO, its management and whoever is backing this little adventure, who presumably feels it is getting its money's worth somehow."

SCO filed for Chapter 11 reorganisation in mid-September. And if it is allowed to sell its declining UNIX business, it would be left with its mobile application platform business.

SCO has also recently come under increased financial pressure following its Chapter 11 reorganisation filing, as it is threatened with delisting from the Nasdaq. The company was given 180 days at the beginning of October to raise its share price, which tumbled to a low of $0.17 earlier this month. SCO's share price closed yesterday at $0.28.

According to York's offer terms, the court's approval of the deal is expected by 9 November, with a view to completing the transaction by 7 December.

Neither York, nor SCO had commented on the proceedings at the time of writing.

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