SCO Uses the "Core" Word - Asks for Stay to be Enforced in Arbitration(Groklaw)

I do not question that Judge Gross sitting on the SCO bankruptcy can decide whether to extend the stay against the pending arbitration. Novell has said apparently that the arbitration is not stayed. And, by this filing SCO wants to claim it should be.

The problem for SCO is that this BK judge has already invited Novell to move to have the stay in the SCO v. Novell case to be lifted. And I assume that Novell will respond to this motion saying both that the stay does not apply to an arbitration in Switzerland and/or that any stay pending against the arbitration should likewise be lifted.

So I suppose Judge Gross could just say “sure, let's stay that too” and then approve Novell's motion to lift them both. And I fully expect that to occur.

Why?

Because the bankruptcy court really only has two choices. Lift the stay or litigate the issues himself. He may be able to do that with the Novell and IBM cases but not likely for the arbitration. If the arbitration has been invoked by right of one of the parties, that does not permit a federal judge (even one sitting in bankruptcy) to decide he gets to decide the issues.

Besides the bankruptcy court needs to know what property SCO has. It does not have to decide what property it has. Only whether it has it and if it can sell it if necessary.

If it is true that SCO has not already paid counsel to handle the issue in arbitration, then I suppose it is very helpful in order to get that approval that SCO bring this matter up as soon as possible. And SCO has done so.

But, chances are pretty great that Judge Gross will lift the stay in the Novell case as well as allow the arbitration to proceed. The court needs to know what property SCO has. But, that does not mean that SCO gets to keep property it does not own. Neither does it mean that SCO can just jam up the works so that nothing can progress. The court in bankruptcy needs answers. It does not need to decide all issues itself. And I do not think it will try to do that either.

See, I guess the judge was right in holding off on giving Novell the first seat in the row. Of course, this would suggest that Novell may have two seats at the table. Perhaps one in the first row (first chair). And a second one with all the other unhappy creditors. Of course the arbitration may not award any monetary damages. It may just decide the legal issues. But, they are important for the bankruptcy court too.

Just what would Judge Gross do if IBM petitioned the court to the stay on its case lifted. And Red Hat too.

The judge in bankruptcy really cares less. He would just say, “Bring on your claims. Here are our forms”.

Oh, and SCO, these are the forms for Chapter 7. Bankruptcies are just one form after another. Nothing new. Nothing abnormal. Just forms.