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SCO Gets $16M Offer For Its Unix Business

It will be up to the bankruptcy judge to decide whether to accept the bid or not

SCO has gotten a $16 million bid from York Capital for its Unix business. Coupled with the $10 million line of credit York is ready to provide, it's money enough to keep SCO's litigation against Novell and IBM going and to underwrite its budding mobile interests, the company says. SCO's lawyers will be filing papers related to the bid this afternoon with the bankruptcy court in Delaware.

That's where SCO landed in attempt to escape what it was sure would be its Armageddon in the Utah district court hearing the SCO v Novell scandal-of-title case.

It will be up to the bankruptcy judge to decide whether to accept the bid or not and if he does, it will then become what they call a "stalking horse bid" meant to flush any superior offers out of the high grass in the next few weeks.

SCO has reportedly been talking to other interested parties but it is unclear whether they could trump York. The window to make a better offer could be left open for maybe three weeks.

The deal SCO has cut with York would reportedly leave SCO with ownership of the litigation and what is being called the "core IP," apparently any IP necessary to the lawsuits. York, a $12 billion Manhattan firm known to buy small software companies with declining revenues and turn them around, would get a 20% interest in any licenses SCO's litigation produces. Say, if circumstances conspired to allow SCO to restart its hated SCOSource Linux licensing scheme. York would also get the right to license SCO's Unix source code and get control of its contracts with licensees. York is expected to invest in the business, which includes a bunch of sterling accounts, and attempt to grow it.

SCO says the arrangement is good for its existing customers because it separates them from the venom its litigation has produced.

York is offering $10 million down and a $6 million revenue-sharing arrangement over three years. SCO would be paid $1 million in year one, $2 million in year two and $3 million in year three. Coupled with the $10 million it says it currently has in the bank, SCO reckons it would have the wherewithal to return to Utah and submit to trial there - provided the Delaware judge keeps hold of its finances and Utah Judge Dale Kimball can't slap it with a constructive trust in favor of Novell over those $25 million or so in royalties it collected from Sun and Microsoft.

Once the trial is over, SCO's legal strategy would then be to post whatever bond may be necessary to appeal Kimball's summary judgment that Novell owns the Unix copyrights and can pull the plug on SCO suit against IBM claiming that IBM dumped SCO's proprietary Unix code into Linux, destroying its business. SCO is certain Kimball's decision will be reversed by the appeals court in Denver because it flies in the face of the federal rulebook.

Kimball has a long string of overturned summary judgments and, if his past behavior is any guide, he usually recuses himself from hearing any cases that are returned. That would suit SCO to a "T" since it feels that Kimball is prejudiced against it. SCO is hoping it never has reason to use York's $10 million line of credit, but it's there if its litigation expenses require it.

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SYS-CON's Linux News Desk gathers stories, analysis, and information from around the Linux world and synthesizes them into an easy to digest format for IT/IS managers and other business decision-makers.

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TiredofLinux 10/24/07 01:56:46 AM EDT

Well it seems that SCO is smarter by some than their competition. Maybe we should look at their operating systems too again, as these Linux versions are enough to drive us all crazy!

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