SOS Alliance's plan to emerge from bankruptcy denied

A federal bankruptcy judge denied the reorganization plan proposed by embattled Save Our Springs Alliance.

The nonprofit filed for Chapter 11 bankruptcy in April 2007. Hearings were conducted in November over SOS' proposed reorganization plan. In a 68-page court order on April 11, Judge Craig Gargotta says SOS failed to demonstrate it could raise donations for a proposed creditor settlement fund.

Although SOS claimed it could pay out larger sums to creditors than they would receive if SOS' assets were liquidated, Judge Gargotta ruled that SOS' plan is not feasible.

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In a statement SOS says that despite the significant setback, it is confident that a plan will be confirmed in the coming months. In the meantime, the organization will conduct its regular course of business.

"We worked hard to come up with a plan that is fair to our creditors and that the court could approve, and we are disappointed that the court did not see it that way," says Weldon Ponder, outside counsel for the SOS Alliance, who handled the case.

"We will evaluate our options, including a motion for reconsideration on the feasibility issue and the potential for proposing a new plan," says Ponder. "For now, SOS Alliance may, with the support of its donors, continue its conservation work in the community."

SOS' descent into bankruptcy began after the organization received a judgment of almost $300,000 in attorney fees stemming from its lawsuit against developer Bill Gunn and his Lazy Nine Municipal Utility District.

SOS Executive Director Bill Bunch says the organization will file a challenge to the Lazy Nine judgment soon, on the grounds that the ruling judge in the lawsuit was a visiting judge without authority to hear the case.

Gunn plans to build thousands of homes in western Travis County, near Bee Creek and Little Barton Creek. According to SOS, construction activity has already polluted the limestone in Bee Creek.

The SOS Ordinance, approved by Austin voters in August 1992 by a 2-1 margin, limits impervious cover in the Barton Springs watershed and fights development that blocks water from flowing into the Edwards Aquifer.