December 30, 2009 SCO bankruptcy hearing audio
Al Petrofsky
court's audio recording of the December 30, 2009 hearing in In re: SCO
Group, Inc. (f/k/a Caldera International, Inc), No. 07-bk-11337,
Bankr. D. Del. (see docket in
http://scofacts.org/nefomatic-test-SCO-Group-bankruptcy.html).
An unofficial transcript, which is currently about 75% complete, can
be found at
<http://scofacts.org/SCO-Group-bankruptcy-1016-unofficial-transcript.html>.
That includes synchronization timestamps, mug shots of the
participants, links to all the pre-hearing filings, and other
information.
Below are a few clips of the audio, with unofficial transcriptions.
The first contested item was my motion seeking enforcement of various
reporting requirements, including monthly operating reports (MORs),
and, as a separate issue, semi-annual subsidiaries reports.
Here is a clip of the trustee's attorney making representations about
the expected filing dates of the MORs for October through December
2009:
http://scofacts.org/SCO-Group-bankruptcy-1016-audio-clip-expect-January.mp3
(10:14:35/+00:10:14) MS. FATELL: We have represented and represent
to this court that we expect that October and November, and
hopefully December, will be filed, uh, timely in January.
Certainly October and November.
And for January 2010 (and subsequent months):
http://scofacts.org/SCO-Group-bankruptcy-1016-audio-clip-twenty-day.mp3
(10:15:24/+00:11:03) MS. FATELL: We are doing our best to comply
with the guidelines, we will continue to do that, and we do not
expect that we're going to file -- um, that, excuse me, that we are
going to run into significant issues that would preclude us from
filing these as close to within the twenty day time period as the
-- as the rules require.
In other words, the represented expectation was that October,
November, and December reports would be filed by January 31, and the
January report would be filed by February 20.
I referred to those representations in the brief I filed on Sunday:
Unfortunately, the trustee has failed to file any MORs for November
2009, December 2009, or January 2010. This is despite his assurances
-- given at the December 30 hearing as part of his successful effort
to persuade the Court not to take any action regarding his numerous
reporting delinquencies -- that the November and December reports
would be filed by January 31.
("Objection of Petrofsky to Motion of Chapter 11 Trustee For Order (I)
Authorizing Debtors' Estates to Obtain Postpetition Financing ...",
dkt #1068, February 28, 2010, at para. 21,
<http://scofacts.org/SCO-Group-bankruptcy-1068.pdf>)
Here is the Court's ruling:
http://scofacts.org/SCO-Group-bankruptcy-1016-audio-clip-reporting-ruling.mp3
(10:16:03/+00:11:42) THE COURT: Well, let me just rule, because I
do think that I understand the circumstances, and, first of all, as
far as, um, the late filing of the monthly operating reports is
concerned, and they're -- whether they are excused or unexcused,
um, I think that the circumstances of the case provide the
appropriate excuse for the late filings. Uh, we have a new trustee
in the case. He has been working -- from everything that I have
seen and reviewed -- very, very diligently. There are major, uh,
issues and difficulties which the trustee is addressing, and, um,
so, I -- I do believe that the late filings are excused here.
(10:16:50/+00:12:29) And I, for similar reasons, um, am not going
to require a firm deadline for the filing of those monthly
operating reports. I, um, I note for example that the, uh, office
of the United States trustee is not present, has not, uh, joined in
-- in the motion, or has not raised a concern, and that is, of
course, of significance to the Court, uh, and in this particular
case, um, as I said, I am satisfied with the trustee's diligence
and efforts and those of counsel.
(10:17:26/+00:13:05) And, uh, I -- I don't think it appropriate to
impose the deadline other than -- obviously, if -- if it -- if it
drags on beyond what the Court views to be a reasonable time, um,
then I will -- I will notify the parties, perhaps with a -- an
order to show cause or something of that kind, um, why the -- the
continued delay is occurring, but -- but it is to me significant
that the trustee also had to prepare monthly operating reports for
pre-appointment, uh, months, which obviously required, I think, uh,
much extra effort on the trustee's part, so I -- I do take note of
that, and -- and will, uh, will deny the motion on the monthly
operating reports.
(10:18:16/+00:13:55) Insofar as the reports for subsidiaries are
concerned, I do note that it was specifically not a grandfathered,
um, rule. It applies in a prospective manner, unless cause is
shown, and I don't think that cause has been shown here why the
Court should, uh, extend the amended rule to, uh, this -- this
debtor -- this -- the trustee in this situation, and, uh, I will
deny the motion for the filing of those monthly operating reports,
uh, subject to -- without prejudice -- if Mr. Petrofsky would like
to file a motion and present evidence to the Court as to why the,
uh, the for cause requirement has -- can be met and is met, then,
uh, certainly, uh, I -- I will reconsider the ruling today, but at
-- at the present time I have not heard a basis to find that --
that cause should, uh, require the Court or the trustee to deviate
from, uh, the clear, uh, import of the, uh, revised rule.
(10:19:33/+00:15:12) So, to that extent, I deny the motion on the
monthly operating reports, and deny without prejudice the motion as
to, uh, compliance with, uh, the amended rule requiring,
prospectively, uh, filings of, uh, the subsidiary, uh, information.
The second contested item was SCO's motion for leave to make a late
filing (the day before the hearing), under seal, of a piece of
evidence attached to a declaration. Here are clips of Judge Gross
explaining his philosophy regarding last-minute evidence (an issue
that is likely to arise again tomorrow), and then giving his ruling:
http://scofacts.org/SCO-Group-bankruptcy-1016-audio-clip-animal-standards.mp3
(10:27:48/+00:23:27) THE COURT: Well, let me just ask a quick
question, Mr. Lewis --
(10:27:49/+00:23:28) MR. LEWIS: Yes, your Honor.
(10:27:50/+00:23:29) THE COURT: -- and that is, are you prejudiced
by the filing? In other words, is -- it's not a surprise document.
And the reason I ask is because -- and I realize that there have to
be standards. Bankruptcy is a little bit of an unusual animal, and
as a judge, I like to try to get things right, and it helps me to
get it right to be able to consider, you know, all of the evidence,
and, uh, unless a party tells me that they in some way have been
surprised, totally surprised -- you know, a witness that was never
disclosed, or a document that was never produced. Um, is that the
-- is that your situation here?
---
http://scofacts.org/SCO-Group-bankruptcy-1016-audio-clip-file-ruling.mp3
(10:30:17/+00:25:56) THE COURT: Well, I certainly do appreciate uh,
the, the concession on paragraph five of the declaration, and in
fact I was going to -- to rule that, uh, it -- it would not be
considered by the Court. Um, as to the document being filed, again
I think that it is -- it's helpful to the Court, it is not
prejudicial. I -- I do appreciate Mr. Lewis's comment -- comments,
that we need to have structure, and we need to have limits, um, but
in this particular case, I think that given the nature of the -- of
the document that is being offered, uh, the -- the fact that, uh,
the opposition was well aware of the document, I, uh, I am going to
allow the -- the filing. I -- I don't know if I could have stopped
the filing. I suppose I could have had it stricken, but, uh, in
this particular case, um, I'm not going to strike the document --
the declaration -- and, uh, I will permit it to be filed under
seal, given its nature.
The last contested item was Suse's motion to lift the stay of the Suse
v. SCO arbitration in Switzerland. No ruling was made at the hearing.
For the Court's ruling denying the motion and giving its reasons for
doing so, see the 8-page opinion entered on January 15 (dkt #1037,
<http://scofacts.org/SCO-Group-bankruptcy-1037.pdf>).