02.21.10

Just in Time: SCO Finds Another Cash Injection Proposal… from Former SCO Chairman

Posted in Bill Gates, Finance, Free/Libre Software, GNU/Linux, Microsoft, Novell, SCO at 10:50 am by Dr. Roy Schestowitz

Money in Brazil

Summary: The company that just refuses to die suddenly finds a new fountain of cash and Microsoft continues to stifle Free software through infighting and infiltrations

MICROSOFT has a proven (and thus factual) history of putting money in SCO, which has been suing Linux for almost a decade, always finding some extra cash to fund more motions and ensure that the trial does not end. On numerous occasions in the past we showed that Alwaleed bin Talal, a friend and/or partner of Microsoft’s Bill Gates, made his appearance in relation to investments in SCO [1, 2, 3, 4]. There are a few other examples like this (the firm of Bill Gates’ father for example), where Microsoft seemed like it was still funding these baseless lawsuits against Linux. Well, according to Groklaw, Ralph Yarro wanted to give a couple of million to SCO just a short while ago:

You’ve been expecting this, I’m sure. Ralph Yarro wants to loan SCO some money, $2 million, or more accurately up to $2 million, and the SCO trustee, Edward Cahn, wants to let him. It’s all at “arm’s length” and “in good faith” negotiations with this SCO insider, don’t you know. So, does this mean nobody else wants to fund SCO? No potential buyers? Just Ralph? And Cahn asks the court to please shorten the time to handle the motion. Is SCO on its last legs or something?

The motion calls Yarro the “former Chairman” of SCO’s board of directors. See all the stuff you can hide if you don’t file MORs or with the SEC, despite being a public company? Say, didn’t Cahn promise to file those MORs by now? What, they look too awful? Still, they’re supposed to be filed. Well, well. SCO’s MO seems to be catching. Delay, delay, delay while they keep their greedy hand reaching desperately for the brass ring.

“The Trustee is advised that Seung Ni Capital Partners, L.L.C. is a newly formed entity formed by Ralph J. Yarro III (“Yarro”) and was created for the purpose of providing postpetition financing to the Debtors. Since Yarro is the former Chairman of the Debtors’ Board of Directors and the Debtors’ largest shareholder, Yarro is an insider pursuant to Bankruptcy Code section 101(31). See 11 U.S.C. § 101(31). The Trustee represents that at all times the negotiations among the Trustee, his advisors and Yarro were at arms-length and in good faith.”

Wait. Look at page 2. It’s a loan from Ralph in public and “other lenders from time to time”. Uh oh. Page 3:

9. In accordance with the Credit Agreement, additional Lenders may also make loans to the Debtors under the Credit Facility from time to time.

Not another weirdo deal with shadows… Remember the York deal in 2007, speaking of shadows? It was a Super Dooper Senior Secured Super-Priority Credit Agreement too. We’d better look at the exhibits, which set forth the precise terms. I’ll swing back by after I do that.

[...]

The H has coverage of this too.

In the dispute between the SCO Group and Novell about the copyright for Unix, the new jury trial scheduled to begin on the 8th of March is apparently set to go ahead: according to a statement by Chapter 11 trustee Edward Cahn, SCO’s majority owner Ralph Yarro wants to inject a loan of $2 million dollars into the financially stricken company.

Legal observers at Groklaw reported that Ralph Yarro intends to finance the loan via his investment company, Seung Ni Capital Partners. The loan is termed to run for a year at an interest rate of 6.6%. SCO will have to repay the loan before settling its other open debts. Among these is a court order to pay $2.5 million to Novell. Earlier, trustee Cahn had told the bankruptcy court that SCO was in urgent need of further funding if it was to survive the new trial. The trustee said that without further funding he would not be able to continue SCO’s business.

Pogson wrote about the duration of this. The longer it goes on, the more Microsoft benefits. It provides FUD against Linux.

Presumably Novell will soldier on with this handicap and SCO gets to bring up years of irrelevant evidence as it did before. How the trial can go in two or three weeks with this Pandora’s box now opened is beyond me.

Another strange thing. The judge made his ruling without a hearing… That can happen if the matter is clear but there is obviously a dispute. Why not have it out in a hearing? I fear the fix is in. SCO is getting everything its own way, even having Utah law applied to a California contract. Novell will have to start all over again in SCOTUS. How many years will it take?

Other new articles from Groklaw (regarding SCO) are:

More filings can be found here.

What’s also worth commenting and remarking about is Microsoft’s OSBC keynote. Darryl Taft wrote about it, but he changed his headline (or maybe the editor did) from “Microsoft to Spread Open Source Love at Business Conference” to “Microsoft to Talk Open Source at OSBC”. Why the sudden change?

In any case, Dana Blankenhorn wrote about this too and he used a provocative headline, namely “Will open source accept Microsoft leadership”:

It will once again be a “platinum sponsor” at the Open Source Business Conference in San Francisco next month and its National Technology Officer for the U.S., Stuart McKee, will deliver a keynote.

At Groklaw, Pamela Jones wrote: “This is where precise language matters. Free Software, the F in FOSS, will never accept Microsoft’s “leadership”, since that leadership has given evidence of attempting to destroy or make useless the GPL and has actively FUDed against Linux, threatening it with patents. Besides, their software is poorly designed, in the community’s view, so leadership to where? to what? for whose benefit? If you read the exhibits in the Comes v. Microsoft litigation, you’ll find there have been earlier “charm offensives”, as Dana calls it, and they were indeed for the purpose of destroying competitors. So the real answer to Dana’s question is, only if they’re stupidly naive.”

“If you read the exhibits in the Comes v. Microsoft litigation, you’ll find there have been earlier “charm offensives”, as Dana calls it, and they were indeed for the purpose of destroying competitors.”
      –Pamela Jones
Regarding the CodePlex Foundation picking Paula Hunter as Executive Director (we covered this in [1, 2, 3]), Jones quotes Andy Updegrove: “As you’ll see from the announcement, one of Paula’s prior jobs was as the Executive Director of UnitedLinux. UL was a client of mine, and that’s where I first met Paula. And if you’ve never heard the saga of UL, it’s a rather fascinating story.

“Since it was a client, I can’t go into many details, but suffice it to say that it was an early casualty of SCO’s maniacal and misguided obsession with trying to tax the development of Linux.”

“And now she works for Microsoft’s Codeplex,” says Jones. It’s a small world when Microsoft acquires what only looks like competitors.

“On the same day that CA blasted SCO, Open Source evangelist Eric Raymond revealed a leaked email from SCO’s strategic consultant Mike Anderer to their management. The email details how, surprise surprise, Microsoft has arranged virtually all of SCO’s financing, hiding behind intermediaries like Baystar Capital.”

Bruce Perens

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