IBM, Novell Move To Block SCO's Unix Sell Off - InformationWeek

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Software // Enterprise Applications

IBM, Novell Move To Block SCO's Unix Sell Off

SCO is hoping to sell its UnixWare line of business software and some of its mobile technology to investment group York Capital Management for $36 million.

IBM and Novell on Thursday asked a bankruptcy court judge to block The SCO Group's sale of its Unix technology to a private equity firm, which the software vendor has proposed as part of its Chapter 11 reorganization effort.

IBM, one of SCO's creditors, said in a court filing that SCO shouldn't be allowed to sell off its assets in part because Chapter 11 protection is meant to give cash-strapped companies a chance to reorganize -- not liquidate their assets.

"SCO does not provide any evidence why the asset sale is a sound exercise of business judgment (or) any explanation or justification for the haste in which SCO has entered into a sale of substantially all of its assets," IBM said in its motion.

SCO last month asked the bankruptcy court in the District of Delaware for permission to sell its UnixWare line of business software and some of its mobile technology assets to investment group York Capital Management for $36 million.

IBM called SCO's description of the assets it has agreed to sell to York "impenetrably vague." IBM also contends that it holds copyrights in some of SCO's Unix-based products and that SCO, therefore, does not have the right to sell them.

"It appears that SCO seeks improperly to sell assets that it does not own, including IBM licenses and IBM copyrighted works," IBM said.

In its own motion, Novell called the proposed sale "ill advised at every level" and states that it involves assets that "the District Court has already determined belong to Novell."

The Utah District Court on Aug. 10 ruled that Novell, and not SCO, owned the copyrights to Unix, thereby gutting a business interference lawsuit that SCO filed against Novell. The court's decision means that SCO may have to remit to Novell more than $25 million in fees it collected from selling Unix licenses.

A trial to decide the final amount that SCO owes Novell has been postponed pending the bankruptcy court proceedings. SCO filed for Chapter 11 shortly after the Utah court's Aug. 10 decision.

Novell, in its motion Thursday, is now accusing SCO of trying to sell assets "whose ownership by [SCO] is, to put it mildly, in serious question."

The Delaware bankruptcy court has scheduled a hearing on the issue for Tuesday, Nov. 6.

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