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Novell (NOVL) is not keeping up with its paperwork, and it is causing headaches.

Due to the company’s previously disclosed internal probe into stock-options backdating, the company has yet to file its 10-Q for the quarter ended July 31. As a result, Novell said Wednesday afternoon, it has now received a “staff determination” from Nasdaq that the company is subject to delisting. Novell says it will appeal and request a hearing before a Nasdaq qualifications panel, which will automatically stay delisting pending the panel’s review.

Novell also said it has received a letter from Wells Fargo, the trustee on the company’s $600 million 0.5% convertible senior debentures due 2024 “which asserts that Novell is in default under the indenture because of the delay in filing” the 10-Q. Novell says that “it does not believe that it has failed to perform its obligations under the indenture,” and that the notice is “invalid and without merit.” Nonetheless, Novell notes that if the notice is valid, and if it becomes “an event of default,” which would occur if the default is not cured within 60 days, the trustees or the holder of at least 25% of the debentures “may accelerate the maturity of the deventures.”

A default seems unlikely, and I suspect the notice from Wells is more procedural than punative; you need to send a notice to get the clock started. Nonetheless, it is a vivid signal of the dangers posed when you stop filing with SEC on a timely basis.

In after hours trading, Novell shares have slipped 20 cents, to $6.18.

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Source: Novell Receives Nasdaq Delisting Notice