SCO finds buyer, potential rescue from liquidation

By Jeff Feinman

June 24, 2009 — The SCO Group has found a group of investors to purchase its Unix and mobile business, which may be a key step in getting the company out of bankruptcy and away from potential liquidation.

SCO signed a definite agreement with unXis, an investment group led by private equity firm Gulf Capital Partners, last week to shell out the SCO’s Unix wing and other parts of the business to the new entity.

SCO executives said they hope this helps the company avoid liquidation, as the U.S. Department of Justice made a motion in early May to convert SCO’s Chapter 11 bankruptcy protection to Chapter 7.

As part of the deal, SCO would retain the Unix rights that are currently under dispute in court, although its Unix business would fall under unXis’ helm. unXis would also take in SCO’s mobile application business, including all Mobile Server technology. Jeff Hunsaker, president and COO of SCO, said all employees would move to unXis. CEO Darl McBride would remain with SCO and continue on with all outstanding litigation.

SCO has several court cases pending. Most recently, a November 2008 federal court ruling reiterated that Novell had retained the copyright to Unix. The judgment declared Novell as the owner of Unix. SCO’s other cases versus IBM and Red Hat have been stayed until SCO emerges from bankruptcy.

SCO said that upon approval of the court, unXis will be fully protected against future court decisions.

“This new group has no interest in the litigation, and it will be firewalled, if you will, from SCO,” Hunsaker said. “So the new company will invest in new technologies, and we’ll upgrade and enhance our Unix product lines.”

Hunsaker stated that SCO and the investors behind unXis have been in talks for “over a year now,” as SCO has gone through Chapter 11 proceedings. The other group involved in unXis besides Gulf Capital Partners is London-based investment firm MerchantBridge Group.

When asked if current economic conditions might make this acquisition difficult, Hunsaker said he didn’t expect there to be any funding issues.

“I think these investors realize that there’s a little bit of a gold mine with this company,” he said.

The U.S. Bankruptcy Court has set a July 27 hearing to review the agreement and motions.

Related Search Term(s): SCO, Unix, unXis

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