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By | Gavin Clarke 14th September 2007 22:35

SCO files for US bankruptcy protection

Lawyers got theirs

SCO Group today filed for bankruptcy protection. With less than $10m cash left to call on, SCO said that Chapter 11 protection and reorganization would protect assets as it addresses, ahem, "potential financial and legal challenges".

The move comes after a US judge last month found Novell, not SCO, is the owner of the Unix and UnixWare copyrights. The judge also ordered SCO to pay royalties to Novell, arising from Unix licenses that it had sold to Sun Microsystems and Microsoft. Novell could be owed as much as $25m, according to industry estimates.

SCO had dismissed as FUD claims by Novell earlier this year that it lacked the cash to pay and was staggering towards bankruptcy.

In subsequent interviews, intended to show SCO was coming out fighting, embattled chief executive Darl McBride insisted SCO would not only appeal the judge's decision but SCO didn't owe a red cent.

"The deals with Sun and Microsoft were about the latest and greatest of UnixWare technology, which is ours," McBride said.

It's a bitter, but predictable, end to a case that saw McBride gamble big and in which SCO poured money into the pockets of its attorneys, Boies, Schiller & Flexner.

Five years ago, then new CEO McBride launched a $5bn legal action against IBM over alleged violations of its Unix IP in Linux by the systems giant, and soon become mired in a string of counter suits.

As SCO's Unix business melted each quarter, the company tipped from profit to loss, at times simply thanks to the size of its attorneys bills. In one quarter alone SCO paid $9m. As the case progressed and the coffers emptied, SCO offered Boies and Co. a 20 per cent stake as payment if the company was sold.

Any sale today would surely be a fire sale. ®

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