A federal bankruptcy judge has rejected a reorganization plan that would have protected the Save Our Springs Alliance from its creditors. The court’s ruling, issued Aug. 8, is a victory for Austin developer Bill Gunn, who had sought the dismissal. However, it doesn’t altogether clear the ground for him to stake a claim on SOS’ assets in trying to collect on a $500,000 judgment he won against SOS in 2004. That’s because other creditors stand ahead of Gunn, including longtime bankroller Kirk Mitchell, and SOS intends to appeal the decision.
SOS filed for bankruptcy in 2007 after running out of legal options in trying to overturn a lower court’s ruling favoring Gunn in a lawsuit brought by SOS. The group had sued Gunn and his partners in an attempt to thwart their plans for a megasubdivision in western Travis County. A visiting judge, Bill Bender of Seguin, heard the case and not only ruled against SOS but ordered the group to pay a bundle in attorneys’ fees.
More recently, SOS has thrown another card on the table: a new lawsuit, filed in Travis County district court, seeking to have Bender’s ruling thrown out on a technicality. According to the suit, Bender wasn’t qualified to preside in the case due to his re-election defeat in the 1998 primary. State law holds that an assigned judge who loses re-election is not qualified to hear a case if either party objects. SOS did object (with Bender overruling) but only learned within the last year that he wasn’t qualified to serve, according to the suit.
This article appears in August 22 • 2008.
