SCO challenged IT giants IBM and Novell over the rights to the
Unix operating system in a set of court cases which began in 2003.
On 10th August the company lost its case against Novell when a
court ruled that Novell and not SCO owned copyrights to the Unix
system.
One month after the ruling the company filed for Chapter 11
bankruptcy, a US process in which the company is shielded from
creditors while it reorganises itself. The company has now lodged a
filing with financial regulator the Security and Exchange
Commission (SEC) which casts doubt on the future of the
company.
"As a result of both the Court's August 10, 2007, ruling and the
Company's entry into Chapter 11, there is substantial doubt about
the Company's ability to continue as a growing concern," said the
filing.
The court ruling meant that SCO now owes royalty payments to
Novell, rather than the other way round. Novell is seeking $30
million plus interest from SCO.
"If a significant cash payment is required, or significant
assets are put under a constructive trust, the carrying amount of
our long-lived assets may not be recovered," said SCO's filing.
When the company filed for bankruptcy protection last week,
chief executive Darl McBride had said that customers will be able
to rely on the firm. "We want to assure our customers and partners
that they can continue to rely on SCO products, support and
services for their critical business operations," McBride said.
But in this week's filing, the firm explicitly recognised the
possibility of its being unable to emerge from the bankruptcy
process
"If we require additional financing during the Chapter 11 cases
and we are unable to obtain the financing on favorable terms or at
all, our chances of successfully reorganizing our businesses may be
seriously jeopardized," it said.
To add to the company's financial worries, it has been told that
it will be de-listed from the Nasdaq stock exchange as early as
next week. It has asked for an appeal hearing, but it will have to
present a Nasdaq committee with a viable business plan if it is to
be given permission to stay on the exchange.
On the day that the US court announced its decision SCO shares
began the day trading at $1.49, but this week those shares were
languishing at 20 cents each.
