Just back from the hearing and -- short story -- SCO got pretty much everything they wanted. Novell asked for a trust, but the judge denied it saying if he granted on the basis of what they presented, it would be preferential treatment. The judge invited Novell to file a motion to lift the stay in the Kimball trial and he would consider it at that time. Novell assured him they would file the lift stay motion and they will be back in Wilmington.

Keep in mind that no important motions were heard today. That happens at the next hearing. This was about paying sales taxes and not shutting off utilities. However, Novell did show up to let the judge know they want their money. The judge asked them to present a motion, and they will.

On August 10, 2007, the federal judge overseeing the Company's lawsuit with Novell, Inc. ("Novell") ruled in favor of Novell on several of the summary judgment motions that were before the United States District Court in Utah (the "Court"). The effect of these rulings was to significantly reduce or to eliminate certain of the Company's claims in both the Novell and IBM cases, and possibly others. ... Over the Company's objection, a bench trial was set to begin on September 17, 2007 and the federal judge was to determine what portion, if any, of the proceeds of the fiscal year 2003 SCOsource agreements is attributable to SVRx technology and should be remitted to Novell. The range of the payment to Novell could have been from a de minimis amount to in excess of $30,000,000, the latter amount being the amount claimed by Novell, including interest. Novell has sought to impose a constructive trust on the Company's current funds derived from these sources, which could result in a freeze of the Company's assets, and the Court indicated that it would address that issue as well. The trial of these issues, however, was stayed as a result of the Company's filing a voluntary petition for relief under Chapter 11 of the Bankruptcy Code on September 14, 2007....As a result of both the Court's August 10, 2007 ruling and the Company's entry into Chapter 11, there is substantial doubt about the Company's ability to continue as a going concern. Absent a significant cash payment to Novell for this matter, management believes it is remote that the undiscounted future cash flows generated by the Company would not be sufficient to recover the carrying values of the long-lived assets over their expected remaining useful lives.

However, if a significant cash payment is required, or significant assets are put under a constructive trust, the carrying amount of the Company's long-lived assets may not be recovered. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties.

The Company intends to maintain business operations throughout the bankruptcy case. Subject to the Bankruptcy Court's approval, the Company will use its cash, cash equivalents, restricted cash and subsequent cash inflows to meet its working capital needs throughout the reorganization process.

Unless I am misreading, I gather SCO believes the only way to keep going is to stiff Novell. But I question if that is going to be possible.