In 2011, Cahn sold off the Unix computer operating system and related services to a company called UnXis and now he says the IBM lawsuit is now the company's only asset. TSG Group is insolvent with $3.7 million in debt incurred since the bankruptcy filing in 2007 and has only $143,352 of cash on hand, according to the motion to convert the bankruptcy case.
As in other similar bankruptcies, "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," the motion said.
Chapter 7 would allow the trustee to eliminate administrative expenses while awaiting the outcome of the IBM case, which now is the company's "only reasonable opportunity" to pay outstanding expenses, the motion said.
Cahn also seeks to continue as the trustee if the case is converted, to oversee the litigation and any administrative matters.
The IBM case was closed pending the outcome of a related lawsuit SCO filed against Novell Inc. In that case, a jury decided in 2010 that Novell, and not SCO, owned the copyrights to Unix that existed before Novell sold the system in 1995.
A motion is currently pending in U.S. District Court in Salt Lake City to open the IBM case.
SCO contends that IBM engaged in unfair competition when it allegedly misappropriated and misused Unix code, which SCO contends was the basis for a key change that allowed the Linux operating system to become a commercial competitor to Unix.
Linux's basic codes are open source, meaning anyone can use them for free, but businesses such as IBM and Novell have built commercial products around Linux and competed with SCO's Unix and other systems.