More from SCOland

The SCO saga has finally reached the interesting stage. Let's have a recap of the last couple of days worth of news.

Friday: SCO files for Chapter 11 bankruptcy. Share prices drop to 0.38 (down 43%).

Sunday: Half of SCOs accountants resign or are fired.

Monday: SCO requests permission with the Bankruptcy court to hire temporary accounting staff. SCO file a notice of late filing with the SEC about their missing 10Q. Apparently now that they've lost most of their accounting staff they're having difficulty keeping up. Share price drops a further 40% finishing at 0.22 (as the days range was from 0.15 - 0.31 the price could drop further today).

So what is the plan for today? Well the bankruptcy hearing is set for 8.30am, with Novell making a showing with their lawyers too.

Even if the courts accept SCOs request for Chapter 11 protection, there is still a real chance that Novell will get its money back BEFORE the creditors get a chance to pick over the carcass. Depending on what is said, SCO could still end up going into Chapter 7 - which would mean that the company would be liquidated to pay its debts.

My personal opinion is that at the point where the SCO management changes (and there is a real possibility that the bankruptcy court may insist on that) then it will be Game Over for SCO.

I'll update this post later on today rather than posting hundreds of SCO related posts.

Update 1 (13:10): SCO's 10Q has now been filed.

Update 2 (22:40): Well, that's it for the day. SCO survived the first Bankruptcy hearing. Novell asked for their money to be placed in a trust, which the Judge denied. Novell are to request a lift on the stay of the Utah trial (the one where just how much SCO owes will be decided). The next bankruptcy hearing is set for October 5, to give everyone who SCO owes money to chance to have their say. Shares finished at 0.16 (down 28%).

It's all over, or is it?

So now that SCO has filed for Chapter 11 bankruptcy does that mean it's all over?

Well, not quite. It may extend SCO's life by another six months whilst they are "reorganising." Or will it?

That will be the interesting thing. Chapter 11 bankruptcy should protect SCO from their creditors whilst things are rearranged to allow them to pay their debts and continue trading.

This may not be enough to defend them from Novell for long though.

The money from the SCO licenses to Microsoft and Sun is Novell's and was supposed to be handed in full to them, after which the "finders fee" would be returned to SCO. Instead SCO have been spending Novell's money on the case.

The loophole in Chapter 11 is that funds like this may end up being returned, as Novell aren't creditors but the owners of the funds. In other words it was never SCO's money to spend.

The court cases are temporarily on hold - but the drama may not be finished.

SCO Files for Chapter 11 Bankruptcy

I'm not too sure if I'm surprised at this or not - but the next chapter in the SCO saga seems to be Chapter 11: bankruptcy.

On Monday the Novell trial was supposed to set just how much SCO owed from their licenses to Microsoft and Sun, so the timing of this announcement would seem to indicate just how secure they believe their position to be - ie. totally boned. Or to put that another way, they probably don't have enough cash reserves left to pay Novell what they owe them.

To quote Darl McBride President and CEO, The SCO Group. "Chapter 11 reorganization provides the Company with an opportunity to protect its assets during this time while focusing on building our future plans."

As to what this means to the court cases (SCO vs Novell / SCO vs IBM) remains to be seen, although it certainly looks like after four years the end is in sight.

Shares in SCO Group Inc (SCOX) closed at 0.38, down from 0.65 which is a drop of 43.08%.