SCO Buyout Plan Calls For CEO McBride's Departure

To replace McBride, the board of the reorganized SCO will seek "an outside executive with suitable industry experience," according to court documents.

Paul McDougall, Editor At Large, InformationWeek

February 15, 2008

2 Min Read

Darl McBride, one of the tech industry's most polarizing figures over the past half-decade, will step down as chief executive of The SCO Group under a $100 million reorganization plan for the bankrupt Unix vendor that's been floated by a private equity group.

According to a Memorandum of Understanding between SCO and Stephen Norris Capital Partners, "the existing CEO of SCO, Darl McBride, shall resign" if the deal goes through.

To replace McBride, the board of the reorganized company will seek "an outside executive with suitable industry experience," according to the document, filed Thursday in federal bankruptcy court in Delaware.

McBride has been widely vilified in some corners of the tech industry, particularly those occupied by advocates of the open source Linux operating system. McBride drew their ire after leading a drawn out legal assault on Linux distributors and users.

SCO maintains that Linux violates intellectual property rights it controls through its claimed ownership of the Unix operating system. To enforce those rights, SCO filed lawsuits earlier in the decade against IBM and Linux users AutoZone and DaimlerChrysler.

SCO also sued Novell, from which it claims it acquired the copyrights to Unix.

Last August, however, a federal judge in Utah ruled that the Unix copyrights reside with Novell -- a decision that leaves SCO on the hook for as much as $30 million in back payments to Novell. SCO filed for Chapter 11 bankruptcy protection shortly after the decision as its potential liabilities are worth more than its total assets.

A trial to decide the exact amount of the damages is slated to get under way in April.

Given McBride's lightning rod status, particularly among many potential SCO customers, it's possible that the company's new backers believe a fresh start is required. SCO's financial liabilities and bankruptcy filing make the $100 million buyout offer all the more surprising.

Under the proposed plan, disclosed Thursday, Stephen Norris Capital Partners "and its partners from the Middle East" will provide up to $100 million in funds to remove SCO from Chapter 11 and take the company private. The plan has received unanimous approval from SCO's board, but still requires a green light from the bankruptcy court.

The buyers say they see "a tremendous investment opportunity in SCO and its vast range of products and services, including many new innovations ready or soon to be ready to be released into the marketplace," according to Stephen Norris, managing partner for SNCP.

About the Author(s)

Paul McDougall

Editor At Large, InformationWeek

Paul McDougall is a former editor for InformationWeek.

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