SCO, whose claim to the Linux kernel has touched off a firestorm in the open source realm, is on the verge of bankruptcy, according to court documents filed by legal opponent Novell, several publications reported.

SCO has also failed to pass on more than $26m in licensing fees from Sun Microsystems and Microsoft, as required by terms of a purchase agreement SCO struck with Novell, according to a motion for summary judgment filed in the case on Monday.

"For SCO, bankruptcy is inevitable; it characterizes its assets as merely those 'remaining' and does not rebut Novell's arguments that its bankruptcy is imminent," according to the Novell filing, which Groklaw has posted in its entirety.

Information Week reported that Novell was entitled to $26m of licensing fees SCO received from Sun and Microsoft. Novell attorneys argued the company will be irreparably harmed if it doesn't receive the funds before SCO financially collapses.

In a story carried by DevX.com, SCO spokesman Blake Stowell responded that Novell was spreading FUD and that SCO would report "all aspects of our business" next Wednesday when the company releases fourth-quarter financial results.

SCO rocked the open source world in 2003 when it filed a $1bn lawsuit against IBM claiming the latter company's contributions to Linux violated SCO's intellectual property rights to Unix. After Novell argued it was the rightful owner of Unix, it was sued by SCO. ®