Half of SCO's Accountants Quit 371
Groklaw Reader writes "Apparently, SCO's lawyers were working overtime last Sunday, because they wrote a quick plea to the bankruptcy court for permission to hire accounting temps. Why? Approximately half of SCO's finance department has resigned or been fired. Two who resigned had over ten years of experience each. One can only assume that they know what's about to happen to SCO."
Almost done. (Score:5, Funny)
Half the accountants? How about some of the lawyers too?
I guess the rats are leaving the ship.
Re:Almost done. (Score:4, Interesting)
Comment removed (Score:5, Informative)
Re:Almost done. (Score:5, Insightful)
Or they can apply to put the company into liquidation, that is Chapter 7. At the moment SCO is in chapter 11, that is reorganization. If the company cannot continue to function it is not reorganizing and has to liquidate.
The problem for SCO here is that it can only reorganize in Chapter 11 if it has a good chance of demonstrating that it can secure the agreement of its creditors to the reorganization plan. The current management only have 120 days in which they have the exclusive right to propose a reorganization plan. After that they would have to pursuade the court to extend that right.
The question I would be interesting in knowing the answer to is what the situation is with respect to Novell's claims. Clearly SCO is going into bankruptcy before the bench hearing to determine what SCO owes Novell. Certain types of lawsuit get stayed by bankruptcy but it would seem odd if a case that had been decided on the merits and was only waiting for damages to be determined to be stayed by a voluntary liquidation when the only 'business' the company has is litigation.
The end of SCO does not necessarily mean the end of the case. I seem to remember that Boies and co have a bunch of charges against the assets of the company which allow them to acquire certain SCO assets and continue the litigation. Not that this is necessarily a bad thing, given the amount of time and money that has gone into the case and given that it looks like SCOs case is utterly toast it might well be better for it to at least result in a precedent.
It should not cost $50 million to force a plaintif to state a valid claim. There should be a clear precedent that ugabugah copyright lawsuits where the plaintif fails to state what the allegedly infringing content is get tossed out in future.
A non-authoritative take on Novell's claims (Score:3, Informative)
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Re:Almost done. (Score:5, Funny)
How do we know half the accountants quit? (Score:5, Funny)
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The other half, of course!
However, I would think the number is suspect because only the clueless accountants remain...
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Re:Almost done. (Score:5, Interesting)
Sure, I understand that they are protecting their rights and IP and that they are right to do so. But by pulling the carpet out from under SCO's feet, they also prevented SCO's claims that "millions of lines of codes were copied from UNIX to Linux" being thoroughly tested (and debunked) in court.
I think that it was a good thing that SCO targeted IBM, who 1) had the resources to fight SCO (and their sponsors), and 2) happened to be on the side of Linux developers/users. So it would have been an excellent opportunity to quash this claim once and for all. Despite SCO's bluster and chest-thumping, I think it would have been extremely unlikely for them to be able to convince any person of even limited intelligence of their claims (including Enderle, Didio and O'Gara).
But all we have now is a statement from Novell saying that there is no Unix in Linux. With Novell being so deep in bed with Microsoft, I am slightly nervous with Novell's overall position and and disposition towards Linux.
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By defending themselves in the lawsuit that SCO filed against them [wikipedia.org], you mean. I know what you mean, but they did what they had to do in order to defend their interests.
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Re:Almost done. (Score:4, Informative)
However, Novell said "Hey, we own UNIX." (paraphrased) A judge agreed. SCO's lawsuit evaporates.
Furthermore, Novell has been fighting SCO [novell.com] on this since 2003.
Novell also purchased SUSE Linux in 2003 and turned it into OpenSUSE [opensuse.org], which it also uses as the base for its commercial Linux products.
Novell has also made significant contributions to XGL, Compiz, and OpenOffice to name a few projects.
Despite the constant FUD since the Novell/Microsoft deal, Novell's business model now revolves around FOSS software, so any attempt to kill it would be cutting their own throat.
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1985 SCO delivers XENIX 286 for Intel 80286 processor-based systems.
1998 Caldera Inc. Split off into two new companies Caldera Systems and what was to become Lineo. Caldera Inc. continued to exist until 2000. Following the settlement of the Microsoft litigation, Caldera Inc. was merged into The Canopy Group.
2003 SCO Suspends Distribution of Linux Pending Intellectual Property Clarification; Announces Greater Focus on UNIX and SCOx Strategy
Xenix was once the OS a certa
Re:Almost done. (Score:5, Informative)
They may have claimed about millions of lines of codes being copied, but the actual case filed was only regards breach of contract. They claimed that IBM had donated its AIX code to the Linux kernel. Their second argument consisted of "Boohoo, Linux would have been nowhere if not for IBM. IBM created a competitor for us. We hate competition. Boohoo!".
The only piece of code they ever showed as being part of the Linux kernel, turned out to have already been released under a BSD license by the original creators and had already been replaced by better alternatives in the Kernel, which made their whole claim seem to go up in smoke.
All in all, it was just FUD sponsored by possibly an under-the-table deal between Microsoft and Darl McBride, with the aim of stemming the expansion of Linux in the server market, till Microsoft got its slightly-more-stable-than-xp vista OS out. It might be interesting to observe in future, whether any more information regards this possible deal comes out, and whether Microsoft can be sued under another anti-trust, unfair-practices case for its part in generating the controversy.
Re:Almost done. (Score:5, Informative)
Actually that is not true. The SCO Groups claims have been thoroughly tested in the court system and The SCO Group are where they are today because the facts discovered in the SCO Group vs IBM case revealed that not only were they lying about finding millions of lines of infringing code but they knew full well they were lying.
Initially they claimed millions of lines of infringed code including line for line copying down to even the comments. When called on that bluff by IBM in the court they produced no evidence and the judge proclaimed an "astonishing lack of evidence" on the part of The SCO Group. Later it was revealed that internal SCO Group e-mails communicated the results of their own investigation of infringement in linux and found "aboslutely nothing" at which point their story changed and it was no longer literal copying but instead obfuscation of copied code. But still when they were compelled to produce the evidence which supported their claims they produce abosutlely nothing and instead changed their story again to claim that somehow they held ownership of "methods and concepts". Unfortunately The SCO Group holds no patents so they have no protected "methods and concepts" either.
This entire debacle was a scam from the beginning and it didn't go to a jury trial because the judge realized that The SCO Group's intention was to baffle the jury with the same bullcrap in hopes of making them believe that some how they must own something in linux when in fact they don't own squat.
Oh, this case has been tested, not just beyond a shadow of a doubt but beyond a frickin' eclipse of a doubt. Scumbags and grifters through and through.
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Novell didn't prevent that testing. SCO's claims *were* tested in court.
The judges repeatedly ordered SCO to provide actual evidence of their claims. They repeatedly ... didn't provide any. That led the judges to remarks like "the vast disparity between SCO's public accusations and its actual evidence -- or complete lack thereof", and eventually to actually toss almost all of SCO's claims entirely [groklaw.net] (the order includes that quote).
Judge Wells didn't just dismiss the claims for lack of evidence. SCO told
Can't pay themselves (Score:5, Insightful)
Re:Can't pay themselves (Score:5, Interesting)
Heck, the accountants probably know that there is no money to pay themselves. So, why work?
Reminds me of a company I once worked for. The accountants (finance people) were sworn to some sort of secrecy not to disclose to other employees what they were doing. Basically only paying accounts when there was dire cause (and in some instances the cheques were immediately pulled from the mail bin and locked in a drawer after the vendor agreed to free things up.) After the fall someone finally told me what was going on. Accountants know the games that are played to keep a semblance of business as usual even when the precipice is looming
Those who stay on risk receiving pay cheques which will not cash.
Re:Can't pay themselves (Score:4, Funny)
Oblig. Simpsons quote (Score:4, Funny)
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who the hell receives pay cheques anyway? doesn't everyone have their pay deposited straight into their account these days?
Must be Monday.
I'm not sure if this question is flamebait or not (being AC I'll bet it is) but as the saying goes I'll bite;
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Ah yes, Texas. What's the bag limit on trick-or-treaters this year?
This is pure speculation (Score:3, Interesting)
Not sure if this is the case but even if the accountants had nothing at all to do with it, they'd be Mudd by association of any bad accounting news came out of this.
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In Norway there's no particular reason not to work for a company that is in danger of collapsing. There is mandatory insurance for outstanding pay for everyone that is not part of management for a period of up to 3 months.
There is also an exception from normal bankruptcy law for nonpaid wages. Normally if you file to have a company bankrupted, there's an associated fee. That is to discourage annoyance-filings and bankruptcies over details (they o
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Now, if it were on one of the manager's resumes, that might be a little worse.
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What's 10 times harder is to find an 80x86 Assembler guru with good knowledge of malware and a clean police record...
Crumble Crumble.... (Score:5, Interesting)
Once they hit chapter 7, as the money runs out, the court will dismember them. Hopefully, the assets they do have end up with IBM.
I'm not so sure about Novell's alignment in the open source world yet.
But even better is this:
If one of their accounting people was a CPA- they could be in deep do do if
there are problems found.
I know this, I'm watching a corporation pull the bond out from under a CPA right
now. The liabilities are incredible and the end game is scary.
Maybe an accountant will have damaging information heh?
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Re:Crumble Crumble.... (Score:5, Funny)
Re:Crumble Crumble.... (Score:5, Funny)
SCO's assets and ip (Score:5, Insightful)
I think the biggest worry I have now... which may actually be moot- is who ends up with SCO's assets and IP?
What assets and ip?
FalconRe:SCO's assets and ip (Score:5, Funny)
There's probably a good number of chairs.
SB
Re:SCO's assets and ip (Score:5, Funny)
Re:SCO's assets and ip (Score:5, Informative)
However, SCO is also illegally holding onto ~$36M of Novell's Unix licensing loyalties.
The one who will get first dibs on SCO will be Novell since that ~$36M is Novell's capital (not a debt/credit) which SCO is trying to convert (fraud) into its own... a detail which SCO apparently conveniently failed to mention to the bankruptcy judge in the first hearing.
Novell licensed its Unix to SCO and asked for a ~95% royalty on sales. SCO sold Unix licenses but never gave any of the money back to Novell. Novell is suing to get this capital back. SCO does not want to be curbed right away so it now attempts to stall by filing for bankruptcy. Tomorrow, Novell, IBM, RedHat and others will surely point out the many faults in Monday's SCO declarations and the judge will very likely order the Novell vs SCO counterclaims suit to proceed in order to establish how much capital SCO owes Novell since settling capital disputes preempts negotiating debts.
By the time chapter 11 proceedings are completed - presumably after Novell is awarded about $20M - SCO will be ripe for chapter 7.
Novell have an equiable interest (Score:3, Informative)
No. Novell licensed its Unix to SCO, and offered SCO a 5% handling charge on collecting Novell's royalties. What's the difference, you ask? The difference is that such money from the licenses that SCO hold is Novell's in equity, not as a creditor. Novell are like the people who leased SCO a photocopier: it's their's, and they can take it without reference to other creditors.
If you steal a car and then go bankrupt, your creditors
Re:SCO's assets and ip (Score:4, Funny)
The several dozen copies of the Book of Mormon ?
Novel has the IP already (Score:3, Informative)
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Is that really a problem anymore? The judge has already ruled that Novell owns the copyrights, and Novell has already waived any liabilities Linux may have. Such a waiver does not seem retractible to me.
If somebody bought SCO's rights then they would first have to get that judgment overturned. And then there is the little detail that it turned out that SCO's claims of Unix code in Linux turned out to
Need to accrue Novell payment? (Score:4, Interesting)
Re:Need to accrue Novell payment? (Score:5, Interesting)
At a reasonable guess, the accountants quit/were fired because they refused to sign the financial statements that were submitted with the Chapter 11 filing. Signing those statements would be professional suicide for any accountant. SCO is probably going to find it difficult to hire anyone who has the necessary standing to vouch for the correctness of an out of date balance sheet whose date was changed.
I think we can now expect the FBI will soon start hauling in SCO officers and lawyers on RICO and SEC charges. Fraud doesn't get much more blatant than submitting such obviously bad financials to a bankruptcy court.
Re:Need to accrue Novell payment? (Score:5, Insightful)
As such, SCO can't legally use Novell's money to pay it's own debts. "Unfortunately" SCO has been keeping lousy books, and didn't keep straight which money was Novell's. The legal hearing that they've stalled with this bankruptcy plea was to determine the size of the amount of money owed to Novell.
As such, I think any CPA involved in this scam *SHOULD* be in serious trouble. It's not certain that this will pierce the corporate shield, and allow Novell to go after the management & the board's personal assets...but it's also not clear that it won't.
Another interesting question is criminal charges. Clearly several laws have been broken, and felonies have been committed. It's not clear that any charges will be filed. "The corporation did it" is a common defense, even when all acts of the corporation were, in fact, performed by people. Personally I would rephrase "the corporation did it" by "it was a conspiracy", but this doesn't seem to be legal custom.
Caution: IANAL
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This concept is a trust [wikipedia.org], and in particular in this case, a constructive trust [wikipedia.org]. Good eye and intuition, if I may say so.
The key point in this is: Under Chapter 7 (liquidation; should they get there) debts are prioritized, and trust priority is different than a general judgment award priority. Assets deemed to have been held in trust may (though not necessarily in this case) be considered a secured debt (which may have, I vagu
Re:Need to accrue Novell payment? (Score:4, Informative)
Yes. As corporate officers of a publicly traded company they have a legal obligation to make sure the books are in order. If there is fraud in the books then they face prosecution. Have you been asleep for the last 5 years or so? Do the names Enron, Tyco, or WorldCom ring any bells??
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Something I have not seen mentioned yet is whether SCO needs to accrue an estimate of what they should be paying Novell - whether they have the cash or not, it needs to go on the books. Their current balance sheet does not reflect it, which is probably one reason why the company is still grossly overvalued at $4.72M.
From what I recall Novell asked the judge to create a trust the money Novell is owed, or claims to be owed, can be put into. But SCO argued it had the money and could pay if ordered.
Falcon
Re:Need to accrue Novell payment? (Score:4, Funny)
In other news... (Score:3, Funny)
What about the other half? (Score:5, Insightful)
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Seriously, what about the other half? Do they have some sort of personal reality distortion field?
They've either got iron-clad guarantee of compensation or they are afraid to leave, go look for another job, what have you.
Ultimately they will all likely find things do not work out and that Bob is indeed not their uncle.
Pessimist. (Score:5, Funny)
Darl can totally turn this thing around. Just you watch. It's just another minor setback. They'll be vindicated - just you see. Soon as they get over this small bump, they'll start raking in the cash from all those UNIX licenses that they're going to get from every single Linux user out there. Just as soon as...
Ok, a joke's a joke but I can't type anymore. My fingers started spontaneously bleeding.
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Re:Pessimist. (Score:5, Funny)
Dude, this is the best time to get in on it! It can ONLY GO UP!
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a resume sent to IBM could read "Knows where SCO's skeletons are buried"
Re:What about the other half? (Score:4, Funny)
They have no one left to cook.
A short trip (Score:2, Funny)
Those can't have been very good accountants... (Score:2)
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The exact contrary is the case (Score:4, Insightful)
Up the Ass (Score:2)
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Unfortunately Darl will still come out of it with millions.
Not necessarily.
First, the "millions" that Darl was paid were bonuses for good performance - but it turns out that the money they counted didn't actually belong to SCOX, so it wasn't profit... meaning that the bankruptcy trustee will ask for it back.
Second, as the money is part of the converted funds (ie., it belongs to Novell) the bankruptcy court can (and probably will) order Darl to turn it over. (If you rob a bank, then give the money to someone else, do they get to keep it?)
There is a very real possi
Half of seven? (Score:5, Insightful)
Re:Half of seven? (Score:4, Interesting)
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Or the three of them were asked to do something illegal or unethical, and declined.
Two resigned, but the third refused to resign -- and was fired.
Seven people in accounting? (Score:3, Insightful)
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(If you doubt my assessment of their software quality [fair, since I
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Re:Seven people in accounting? (Score:5, Interesting)
I work in IT at a small company that uses SCO unix on some servers. We configured a new server and had to buy another license about six months ago. (Don't shun me. We also have several linux servers, but this one needed SCO.)
I was on the phone with our vendor and said to him, "We may be the last people to ever buy this."
He replied, "You're probably right."
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Out of curiosity, have you tried running your SCO applications on FreeBSD? It has all sorts of interesting cross-platform binary support, to the extent that Solaris for Linux runs fine on it. It's rumored that the SVR4 compatibility layer can handle SCO as well as Solaris binaries.
Might be worth a shot if you can't get rid of some applications but detest the rest of the system.
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Oh, so it was you. Everyone else thought it was Sun.
Oooooh! (Score:2)
Ethics lapses and no pay = grumpy accountants (Score:3, Insightful)
You can bet that these accountants were not working for SCO because they loved Daryl. So late or non-existent pay + ethical lapses = hasta la vista, baby.
When the accounts pack up - run! (Score:5, Insightful)
Novell sends in the big guns (Score:5, Informative)
They will probably be trying for two things:
- SCO's attempt at chapter 11 gets rejected on the grounds of bad faith. groklaw post [groklaw.net]
- Even if they don't get chapter 11 pitched, they want the trial in Utah un-stayed.
Given SCO's record, it seems likely that Novell will succeed. Given a checklist for bad faith in bankruptcy, SCO meets most of the criteria.It seems to me that SCO's bankruptcy petition is a bit of a Hail Mary pass attempt. I'm not sure what else they were supposed to do though. Their goose has been cooked for quite a while and they have been doing a masterful job of putting off the final resolution as long as possible.
Re:Novell sends in the big guns (Score:5, Informative)
The main issues in the case will be whether, and to what extent, Novell can grab SCO assets out of the bankruptcy case on the theory that SCO was holding the MS and Sun payments in trust for Novell. You can predict that SCO will argue that the contract with Novell only creates a debtor creditor relationship with Novell and Novell can stand in line with the other creditors.
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Sort of a caldera?
Rats fleeing (Score:3, Funny)
--Joe
disambiguation (Score:5, Insightful)
Not that I am a SCOx supporter. Far from it. I think Novel should go after Darl in his own natural person to recover court costs. And if Darl dies while I'm still able to get around, count on it that I'll fly to his grave site to relieve myself on it. Twice. If it's worth doing, it's worth doing well.
A more damming metric would be to quote how many engineers SCO had on staff, vs. how many SCOx retained. Answer: Not many! SCOx has allowed their product to lag behind hardware to the point that the OS is irrelevant on modern hardware. It simply doesn't work on the new stuff, and doesn't support many current technologies. That's a death knell for any OS.
SCOx concentrated on a niche market, and they didn't pick it any too carefully. That SCOx finds themselves bypassed and disfavored is a mark of just how badly they chose to grow. It's never pretty when a technology company chooses to become a litigation company, it's even worse when they choose the wrong technology to litigate against.
We're getting closer (Score:4, Funny)
http://www.yourfilehost.com/media.php?cat=image&file=Darl.jpg [yourfilehost.com]
What really happened... (Score:3, Funny)
*I know it doesn't add up. That's accountancy.
It may not be what you think... (Score:5, Interesting)
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They would be if any of those sins included some creative accounting, which is certainly a possibility.
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SCO is pathetic. I won't waste my scorn on them. Still, I can't help imagining what their attitude would be if the situation was reversed
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But here, in this world, it is far more likely that the many enemies SCO has made for itself will be lining up to tear bits out of them in any way they can, and while I personally take no joy in the fight now that it's over, I'm not going to start
Re:explain please, (Score:4, Funny)
Sanctimoniousness, for one.
Re:The sad thing really is (Score:4, Insightful)
And SCO is a penny stock at this point, nobody who is sane and worried about their life savings invests in those.
Re:delisting, bankruptcy (Score:4, Informative)
Years ago I worked for a law firm that specialised in things like mergers and acquisitions. They also did a lot of bankruptcy work.
One of their clients was a large company that was mired in Chapter 11 proceedings and was, from the perspective of the general public, doomed to extinction. The attorneys came up with a plan for the company to raise money (and expand their business) by issuing new stock which, unsurprisingly, sounds as bizarre as it is illegal. A few months later (and many letters back and forth from the SEC), the company did just that. They ended up raising just under $40 million, and the law firm earned not only their own extravant fees, but bonuses for arranging that deal and the ones that followed.
The company no longer exists today, but if there's any lesson to be learned from this, it's that the subjects of law and finance are more complex than what you read in the newspapers. If there's money to be made, you can be sure someone will be walking away with some of it, even in SCO's case.
Ticker symbol will change to SCOXQ (Score:3, Informative)
When a company goes into bankruptcy, the ticker symbol has a "Q" added at the end. [sec.gov] So "SCOX" will change to "SCOXQ" shortly, probably on Wednesday.
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-Mike
Shares as gag gifs (Score:3, Interesting)