SCO, the low-end Unix software vendor that sought to claim intellectual property rights over the popular open-source operating system Linux, has filed for Chapter 7 bankruptcy, the first stage in its winding up and liquidation.
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The company had filed for Chapter 11 bankruptcy protection in September 2007, but has insufficient funds to re-organise following the sale of its remaining software assets in April 2011. It had sued IBM over a long-standing intellectual property claim against the computer giant's AIX Unix operating system, but lacks the funds to continue.
According to the filing, the company has more than $3m (£1.9m) in outstanding debts and insufficient funds to pay them. "In the May 2012 monthly operating report, filed on 1 August 2012, the debtors' estates report $3,721,181.00 [£2.4m] in unpaid post-petition debts and only $145,352.00 [£92,800] cash on hand," according to the company's latest legal filing.
It adds: "Additionally, there is no reasonable chance of 'rehabilitation' in these cases as the debtors' estates have already sold substantially all of their assets and have no continuing business operations."
Groklaw, the website originally founded by US para-legal Pamela Jones to follow SCO's failed intellectual property 'land grab' on Linux, summed up SCO's Chapter 7 filing as follows:
"The money is almost all gone, so it's not fun any more. SCO can't afford Chapter 11. We want to shut the costs down, because we'll never get paid. But it'd look stupid to admit the whole thing was ridiculous and SCO never had a chance to reorganise through its fantasy litigation hustle."
The purpose of the Chapter 7 filing is to enable the company to reduce its expenses to a minimum, while it awaits the outcome of its outstanding legal action against IBM. It launched its legal action against both IBM and Novell in 2003, when it claimed first $1bn (£640m), then $3bn (£1.92bn), then $5bn (£3.2bn) in damages.
Further reading
It claimed that Novell had transferred all rights to the intellectual property of Unix when it sold its UnixWare line to SCO, a deal completed in December 1995, and that Linux infringed its Unix intellectual property rights.
It decisively lost the case in 2007 and filed for Chapter 11 bankruptcy protection just before Novell was to be awarded damages against SCO for its counter-claim.
SCO grew during the 1980s and early 1990s by offering a lower cost, low-end versions of the Unix operating system, called OpenServer, aimed at small and medium-sized businesses. Not surprisingly, the company was also the first Unix vendor to feel the heat from the growing popularity of Linux from the mid-1990s.
It acquired the UnixWare operating system from Novell in 1995. But in 2001, SCO sold its rights to Unix and the related divisions to Ray Noorda's Caldera Systems, which subsequently renamed itself SCO Group.
All the software assets of SCO Group were sold to UnXis Inc, a company formed by Stephen Norris Capital Partners and MerchantBridge Group, in April 2011. It supports legacy UnixWare and OpenServer installations, as well as providing virtualisation using Hyper-V or VMware and OpenServer.
