SCO Applies for Chapter 11 Bankruptcy Protection, Blames Linux

SCO Group has announced it is filing Chapter 11 bankruptcy, which ZDNet's Dana Blankenhorn points out is not liquidation, but "where a court official works with a creditors' committee and takes control with the aim of repaying debts." A bankruptcy court in Delaware, has to approve the filing before it will proceed.

InformationWeek reports that CEO Darl McBride blames competition from "alternative operating systems, including Linux" for the company's decline. The claim came in an affidavit McBride filed in support of the bankruptcy petition.

The timing is interesting, if nothing else. Just last month, a judge decided that SCO does not own the copyrights to the UNIX code for which it has been collecting licensing fees for years. Novell does. So SCO may have to turn as much as $25 million of those fees over to Novell. Trial to decide the specific amount was slated to begin Monday.

According to InformationWeek, the company doesn't have enough cash to cover its debts:

As of April 2007, the latest date for which financial numbers were available, SCO had just $7.8 million in cash or equivalents and total assets of only $20 million, SEC records show.