McBride ousted as SCO Group CEO

Lawsuits » Controversial former head of Utah-based company vows to fight on.
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Ousted Monday as CEO of The SCO Group, Darl McBride says it ain't over.

A trustee appointed by a federal bankruptcy judge fired McBride, who has led the Lindon-based seller of business-computer operating systems based on the Unix software in controversial legal battles with IBM and Novell, among others.

McBride, who learned of his ouster on the Internet Monday morning, also said in an interview it appears to him that the trustee is looking to lay off employees or cut pay as part of an attempt to wind down the company and settle the lawsuits.

"I think what they are heading for is either the business gets wound down and sold off and then what's left is the litigation," McBride said. "At that point, what it appears they are angling for is to settle the litigation for what I think are pennies-on-the-dollar type of numbers."

Trustee Edward Cahn, a Philadelphia lawyer appointed in August to run SCO until it exits bankruptcy, did not return a call seeking comment. But a company statement said it would continue with the proposed sale of the company's Unix business while pursuing the legal cases.

McBride expressed puzzlement about his ouster, saying he had been asked by the trustee to raise additional money. He said he found investors willing to pour as much $25 million into the moribund company to pay off creditors, revive its business and continue the potentially lucrative litigation.

He identified Cerberus Capital Management of New York as a potential investor but said the trustee never followed up on his efforts.

McBride said his status as a shareholder gives him the ability to act in bankruptcy court. He said he has the backing of around 50 percent of shareholders for what might turn out to be an alternative plan to exit bankruptcy that could include new investment, perhaps from Cerberus or others.

"I'm putting together an alternative plan ... that will ultimately get SCO its day in court," he said.

Novell and IBM also declined to comment.

The SCO statement indicates that Cahn might follow a previously proposed plan that would sell the Unix business to a company formed by Stephen Norris, the head of a private equity firm, Gulf Cap Partners, and a London-based entity.

That sale would leave SCO with some cash to continue the lawsuits that also include litigation against Red Hat, the No. 1 supplier of Linux-based products, and AutoZone Inc. SCO also would be left with its mobile-applications business.

With revenues falling, The SCO Group sued IBM in 2003, alleging it used SCO's Unix as a model to make important changes in the code of the Linux operating system that allowed Linux to become a competitor.

In 2004, SCO filed another lawsuit saying Novell was falsely claiming to own the Unix copyrights. That case is now set for trial after a lengthy and costly court battle that in 2007 sent SCO into the protection of bankruptcy court in Delaware.

The lawsuits are controversial because they attack Linux, which was constructed under open-source rules, meaning anyone could propose changes that make it work better or perform various functions. Linux is free to users, but companies like Novell take it and sell other products and services around it.