SCO Group strikes deal just before bankruptcy hearing

Technology » Utah firm proposes plan to avoid liquidation.
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The SCO Group lives.

Facing life or death, officers of the embattled Utah software company signed a deal Monday just before walking into a federal bankruptcy courtroom for a hearing on motions to liquidate it. Instead, they proposed selling off the company's Unix business to a London-based firm, while keeping its licensing claims that are part of high-profile lawsuits involving IBM, Novell and other companies.

The SCO Group also would retain its mobile application business, an area where it sees big potential growth.

"We signed that deal just minutes before the court hearing, and walked in and handed it to them, " said Darl McBride, CEO of Lindon-based SCO.

U.S. Bankruptcy Judge Kevin Gross did not hear arguments on motions to sell off SCO's assets and instead set a hearing for either July 16 or July 27 to consider SCO's sale plan.

Part of the proposed deal would sell SCO's Unix software products -- which run computers for businesses -- to Gulf Capital Partners LLC, a group formed by Stephen Norris of Stephen Norris & Co. Capital Partners and other investors. Norris had previously sought to buy SCO along with an unnamed Middle Eastern investor.

Under the new proposal, McBride remains as CEO, while President Jeff Hunsaker would move to direct the new company, along with a majority of SCO's 62 employees, said McBride. SCO would continue to pursue the lawsuits, he said.

IBM, Novell and Stephen Norris either declined to comment or did not return phone calls or e-mails seeking comment.

SCO's bankruptcy resulted from its high-profile lawsuit filed in 2003 against IBM in which it claimed that the computer giant had used Unix software codes as a basis to make improvements to the Linux operating system that made Linux a commercially viable competitor.

Novell, however, stepped in and claimed it, and not SCO, owned the copyrights for the Unix system, prompting SCO to sue to try to establish its ownership claim. But in 2007, a federal court judge in Utah ruled that Novell did own the copyrights in question. Its revenues declining, SCO filed for bankruptcy shortly after the ruling.

SCO has an appeal of the Novell ruling pending before the 10th Circuit Court of Appeals in Denver.

A bankruptcy trustee, IBM and Novell had filed motions asking the bankruptcy judge to liquidate SCO. They argued the company's financial position had continued to deteriorate as it failed in several attempts to reorganize.