[ale] It might be too late to sell your SCOX stock

Jeff Lightner jlightner at water.com
Mon Sep 17 17:18:33 EDT 2007 

Money owed is certainly "debt" no matter how it became owed.  More
properly it is classified as a liability on the balance sheet.   Most
companies will book liability at the start of litigation just to reflect
to potential for loss later.  The Reorganization as I mentioned
previously helps void contracts and agreements as well as debts.
(Delta's reorganization included voiding union contracts even though the
unions had already made concessions in those contracts - that
notwithstanding the bankruptcy court sided with Delta.)

Businesses typically fail not because total liabilities exceed total
assets but rather "current liabilities" (as opposed to long term
liabilities) require payments that exceed the cash "asset".  That is to
say they go under because they are forced by creditors to make payments
to stay in business.   If you don't believe businesses routinely ignore
owing money for things that don't affect day to day operations you've
never done accounting.   

It doesn't matter if you owe $12 million to someone if they have no
security for the debt.  They can rant and rave but they can't ever
actually force you to pay.  It is much like credit card debt (assuming
you're smart enough not to tie it to a home equity line) - they can go
to court and get judgments saying "pay up" but the courts won't actually
ever put you in jail for it or take away your property (unless they can
prove fraud).

The folks that usually force a bankruptcy are the ones that can:
1) Foreclose on mortgages.
2) Repossess equipment.
3) Stop supplying you whatever it is you need to run your day to day
business.
It is the above that Chapter 11 helps with because the court essentially
tells the creditors to back off for a while though they usually get to
petition the court for how things should go in the long run.   

While it has occurred on occasion in past that one court's decision has
muddied another's and the two courts have argued with each other I don't
really see that happening here.

Years ago when Texaco lost a judgment to Pennzoil they specifically
filed bankruptcy as the judgment essentially meant they owed Pennzoil
more money than they were worth. 

The only debt I know of that you can never get rid of via bankruptcy is
IRS debt.  Of course personal bankruptcy laws have changed to favor
corporations over individuals under the Republicans but this discussion
is about corporations so the old rules still apply.

-----Original Message-----
From: ale-bounces at ale.org [mailto:ale-bounces at ale.org] On Behalf Of
James P. Kinney III
Sent: Monday, September 17, 2007 2:58 PM
To: Atlanta Linux Enthusiasts
Subject: RE: [ale] It might be too late to sell your SCOX stock

I _Still_ call dibs on the desk!

On Mon, 2007-09-17 at 14:41 -0400, Jeff Lightner wrote:
> Reorganization allows you to NOT pay obligations at full value.
> Creditors might get pennies on the dollar (or nothing).   A legal
> judgment is an "unsecured" debt so has less standing in bankruptcy
court
> than the other "debts".   
> 
> The reason Lorenzo at Continental and Eastern filed bankruptcy (twice
on
> the former) was specifically so he could get out from under debts and
> contracts.  
> 
> -----Original Message-----
> From: ale-bounces at ale.org [mailto:ale-bounces at ale.org] On Behalf Of
> James P. Kinney III
> Sent: Monday, September 17, 2007 2:28 PM
> To: Atlanta Linux Enthusiasts
> Subject: RE: [ale] It might be too late to sell your SCOX stock
> 
> SCO's net worth is less than what they owe Novell for back payments of
> Unix name licensing. With no product to peddle either, the Chapter 11
is
> just a time delay before the liquidation.
> 
> I call dibs on McBrides desk! 
> 
> On Mon, 2007-09-17 at 13:39 -0400, Jeff Lightner wrote:
> > My point wasn't that SCO isn't doing badly but rather that Chapter
11
> > doesn't mean it has gone under or that it necessarily will do so.  
> > 
> > An example of a company that survived bankruptcy once but later went
> > under on doing it a second time was Continental.   However the
second
> > time was more than 7 years after the first time so anyone who had
> > counted it out the first time would have been premature in that
> > assessment.
> > 
> > Personally I can't see SCO being viable even ignoring the lawsuit
> mainly
> > because there doesn't seem to be much reason to buy a PC compatible
> UNIX
> > variant in a world where there are so many free *nix alternatives.
> > Even for commercial purposes one has RedHat and Suse Linux with
broad
> > 3rd party vendor (e.g. Oracle) product availability.  
> > 
> > 
> > -----Original Message-----
> > From: ale-bounces at ale.org [mailto:ale-bounces at ale.org] On Behalf Of
> > Thompson Freeman
> > Sent: Monday, September 17, 2007 12:56 PM
> > To: Atlanta Linux Enthusiasts
> > Subject: Re: [ale] It might be too late to sell your SCOX stock
> > 
> > 
> > Not that it is important, but you can add US Air to that  
> > list of Chapter 11 survivors. Twice I think.
> > 
> > On 09/17/2007 12:41:50 PM, William Fragakis wrote:
> > > OTOH, if memory serves correctly, Eastern, Pan Am, TWA,
> > > Braniff all
> > > filed Chapter 11, too. Sometimes, Chapter 11 allows for a
> > > genuine
> > > restructuring. Other times, it postpones the inevitable
> > > and isn't much
> > > more than wishful thinking, especially when the underlying
> > > business
> > > model doesn't work.
> > > 
> > > One might be tempted to say that SCO's primary business
> > > model evaporated
> > > in court.
> > > 
> > > regards,
> > > William
> > > 
> > > On Mon, 2007-09-17 at 10:45 -0400, Jeff Lightner wrote:
> > > > Guess again - Chapter 11 is "reorganization" not
> > > "liquidation" meaning
> > > > SCO still expects to be around but wants protection from
> > > creditors while
> > > > it reorganizes.
> > > >
> > > > The biggest recent local example of a successful
> > > emergence from Chapter
> > > > 11 is Delta Airlines.
> > > >
> > > > -----Original Message-----
> > > > From: ale-bounces at ale.org [mailto:ale-bounces at ale.org]
> > > On Behalf Of
> > > > James P. Kinney III
> > > > Sent: Monday, September 17, 2007 10:19 AM
> > > > To: Atlanta Linux Enthusiasts
> > > > Subject: Re: [ale] It might be too late to sell your
> > > SCOX stock
> > > >
> > > > ...not with a bang but a whimper... Couldn't happen to a
> > > more deserving
> > > > board of directors.
> > > >
> > > > Nice to see SGI has recovered from their $0.03/share in
> > > 2006 back up to
> > > > $21.
> > > >
> > > > At the moment, SCOX is $0.25
> > > >
> > > > Sounds like rushing wind from a falling body...
> > > >
> > > > On Mon, 2007-09-17 at 10:04 -0400, Charles Shapiro
> > > wrote:
> > > > > SCO filed for  Chapter 11 bankruptcy protection on
> > > Friday afternoon.
> > > > >
> > > > > I'm so sorry to see this drama wind down to its
> > > inevitable conclusion.
> > > > >
> > > > > SCOX:0.37
> > > > >
> > > > > -- CHS
> > > > >
> > > > >
> > > > > --
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> -- 
> James P. Kinney III          
> CEO & Director of Engineering 
> Local Net Solutions,LLC        
> 770-493-8244                    
> http://www.localnetsolutions.com
> 
> GPG ID: 829C6CA7 James P. Kinney III (M.S. Physics)
> <jkinney at localnetsolutions.com>
> Fingerprint = 3C9E 6366 54FC A3FE BA4D 0659 6190 ADC3 829C 6CA7
> _______________________________________________
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-- 
James P. Kinney III          
CEO & Director of Engineering 
Local Net Solutions,LLC        
770-493-8244                    
http://www.localnetsolutions.com

GPG ID: 829C6CA7 James P. Kinney III (M.S. Physics)
<jkinney at localnetsolutions.com>
Fingerprint = 3C9E 6366 54FC A3FE BA4D 0659 6190 ADC3 829C 6CA7

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