US court blocks sale of SCO assets

SCO has been thwarted once again

Attempts by SCO to salvage some funds from the wreckage of its business were thwarted today when a court blocked attempts to sell off parts of the company.

SCO had planned to offload core business assets to investment groups while retaining enough to continue to fight legal actions against Novell and IBM. However, a judge blocked the move and appointed an administrator to oversee the company's affairs and those of chief executive Darl McBride.

However, this does not mean an end to SCO's legal campaign against Novell and IBM. US bankruptcy judge Kevin Gross said in his summation (PDF) that both sides were at fault in the case.

IBM and Novell had sought to wind up SCO, since the cost of ongoing litigation would be more than the assets they would receive if SCO were sold off. However, SCO had the right to have an independent advisor to determine whether litigation was in the best interests of investors.

"The fact remains that debtors have lost money and have abandoned rehabilitation. They have 'bet the company' on the litigation," said the judge.

"The court's decision to appoint a Chapter 11 trustee will enable an independent fiduciary to assess the litigation with the confidence of the court and without the doubts raised by debtors' adversaries in the litigation."

SCO said in a statement that it was happy that it had avoided liquidation and is reviewing the position.