SCO wants to keep waging legal war after $2.4M asset sale

SCO has secured a deal to sell off its major assets for $2.4 million to an IT …

Ryan Paul – Jun 23, 2009 9:40 am | 41

Only moments before a liquidation hearing earlier this month, SCO dodged the bullet by signing a deal to sell off a portion of its remaining UNIX assets. Some of the specific details of the deal have now been disclosed, including the buyer and the price.

Proprietary UNIX vendor SCO has been swirling around the proverbial toilet bowl on its way to extinction ever since a 2007 court ruling was issued which indicated that the company was not the rightful owner of the original SVRX UNIX copyrights and had no standing to bring copyright infringement lawsuits against Linux users and distributors. The company’s contention that Linux includes UNIX code was also never substantiated, and internal memos from the company have indicated that it was never able to find evidence of such infringement.

The purchaser is unXis, a new company that is backed by Gulf Capital Partners and private equity firm MerchantBridge. It will be led by former SynXis CEO Jim Kelly (Sources have now confirmed that this unXis has no connection with a Canadian company of the same name). According to the asset purchase agreement included in SCO’s recent court filings, Unxis will be obtaining many components of SCO’s software business, including the portion of UnixWare assets that were found by the courts to belong to SCO. Unxis also gets the remaining office supplies, computers, printers, furniture, and other related items. In exchange for all of this, Unxis has agreed to fork over $2.4 million.

Gulf Capital Partners investor Stephen Norris was responsible for orchestrating a previous deal for SCO that fell apart during one of the company’s earlier reorganization attempts.

The asset purchase agreement lists a number of assets that SCO will keep, including its iPhone productivity software business and a patent that covers Java virtual machine multiplexing. SCO also retains the right to perpetuate its litigation and collect for itself whatever damage or settlement payments result from the lawsuits. In light of SCO’s consistent failure to provide any evidence to support its claims or even demonstrate that it has proper standing to bring an infringement lawsuit, the company’s plan is roughly as sound as opening a farm to milk unicorns.

“In summary, the Purchase and Sale Agreement provides that the Purchaser will buy and the Debtors will sell generally, the Debtors’ UNIX business and many of its subsidiary companies, and certain of their Mobility products,” the agreement says. “The Debtors will retain certain Mobility applications, their cash, their accounts receivable, and their litigation and related claims against International Business Machines Corporation, Novell, Inc., AutoZone Corporation, Red Hat and certain Linux users which are not material customers of Unxis (excluding certain large-scale users of Linux servers) that are claimed to have infringed against UNIX copyrights.”

This deal is still largely tentative and it has to be approved by the court before it can be undertaken. SCO’s previous reorganization plans have consistently failed, swiftly eroding the patience of all parties involved in the proceedings, including the US Trustee Program. The nature of the agreement and its last-minute inception make it obvious that it is little more than a stalling tactic by SCO, which has fought every step of the way to delay its inevitable demise.

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