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Bankruptcy Court Says SCO Can Sell Its OS Assets

Novell maintains that SCO needs its consent to do the deal

The bankruptcy court in Delaware ruled Monday that SCO can sell its homegrown OpenServer interests and the UnixWare business - that a federal court in Utah decided SCO bought from Novell - to UnXis, the odd venture involving Stephen Norris, one of the two original founders of the famed Carlyle Group.

UnXis has been offering to buy SCO since mid-2009 for reasons that aren't patently obvious to anybody.

Novell maintains that SCO needs its consent to do the deal and says it won't get it until SCO gives it the $3 million it owes Novell from the breach of their cockamamie 1995 Asset Purchase Agreement (APA), which it thinks UnXis should assume in full.

The Delaware court basically told Novell it's plum out of luck, saying it "understands Novell's desire to punish Debtors for years of expensive and painful litigation. Here Novell's objection to the Motion will not prevail. The Motion seeks the Court's approval of what the Court finds is an arm's length, fair and reasonable transaction in the good faith exercise of Debtors' business judgment. The Court will enter an Order granting the Motion."

Novell is expected to appeal. It's got two weeks. Otherwise the UnXis deal will close by March 31.

The purchase price is a mere $600,000 in cash and warrants. The only other bid was for $18.

SCO, which is waiting to hear how its second appeal to Denver over the Unix copyrights goes, retains the litigation.

UnXis will be run by Richard Bolandz, who's been CEO before at a couple of places, CIO of Qwest, SVP, strategy and technology at MCI Communications and regional sales director of Unisys Global Outsourcing & Infrastructure Services.

He said in a sworn declaration that he doesn't understand why Novell objects to the sale and believes "a strategic alliance between UnXis and Novell would be in the best interests of Novell by offering complementary product lines to UnXis customers as it does with both Microsoft and Linux." SCO still has a lot of servers out there.

Norris is chairman of UnXis and Eric le Blan, a partner in the MerchantBridge Group, is vice-chairman. MerchantBridge, a private equity house, has evidently turned around a few companies and owns 25% of the purpose-built UnXis. Gulf Cap Partners, a private equity house where Norris is chairman, owns another 25%. Both Norris and Le Blan are heavy on Middle Eastern connections.

The money to buy the SCO assets came from Stan Solomonson, a friend of Bolandz's who runs Future Foods, and it's sitting in an escrow account. UnXis expects to raise additional capital.

Hans Bayer, SCO's old EMEA guy, is sticking around as chief marketing and sales officer along with CTO Andy Nagel and CFO Ken Neilson.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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