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Ch. 11 Trustee Cahn Opposes SUSE's Motion to Lift Stay

By Pamela Jones et al.

Edward Cahn, SCO's appointed Chapter 11 Trustee, now making decisions for SCO, has filed an opposition to SUSE's request to lift the bankruptcy stay so the arbitration can go forward. And Al Petrofsky has filed a motion pro se demanding that SCO file its missing MORs.

The Cahn objection to SUSE's request can be summed up simply. SCO has limited funds, and Cahn doesn't want to spend them on the arbitration. The trial in Utah is set for March, and if SCO loses and the jury decides it doesn't own the copyrights, then there will be no need for the arbitration to go forward. If, on the other hand, it wins, then it can proceed with the arbitration issues because, as footnote 5 puts it, "resources may become available to the Debtors if they prevail at trial". SCO has to pay the lawyers for the Swiss arbitration. That is not covered by the agreement with Boies Schiller, and the lawyers in Europe are on top of that. Then they'd have to hire experts. Cahn tells the court that it should defer to his judgment on how to proceed in the various litigations.

Some of us might prefer to see the money spent on the arbitration than on financial advisers. But there is something else, something Cahn doesn't mention, namely that when Judge Dale Kimble ruled on Novell's motion to stay, back in 2006, granting the motion in part and denying it in part, and sent the SUSE claims to arbitration, he also said that if the arbitration was still ongoing when all the rest was ready for trial, he would then decide if the trial needed to be stayed until the arbitration was concluded:

If the arbitration concludes before the parties are ready for trial in this matter, then the court will address the preclusive effect of the arbitrator's ruling on the claims in this case. If this case is ready for trial before the arbitration concludes, the court will revisit the issue of whether to stay the trial on the APA and TLA claims pending the conclusion of the arbitration.

Novell relied upon that commitment, as it had a right to. That is, essentially, all SUSE is asking for, that the stay be lifted so all that can go forward, in that the arbitration is still pending, and the trial on the APA claims is about to begin. Each affects the other, but of the two, the arbitration matters most. While Kimball didn't want to waste time, so allowed both to go on separately simultaneously, he did recognize that the arbitration could have a preclusive effect on the Utah matters. And he left open the possibility of staying the trial on the issue of the APA, namely who owns the copyrights, if the arbitration had not yet concluded. Maybe Novell will end up asking the new judge to look at this question, if the bankruptcy court doesn't lift the stay. He, at least, is not supposed to look at things all tilted in SCO's favor the way bankruptcy court seems to. And somebody has to honor Judge Kimball's order that the matter of staying the trial would be revisited if the arbitration wasn't finished when it was ready to begin.

Full post as published by Groklaw on December 16, 2009 (boomark / email).