S.O.S. is a nonprofit charitable organization that sues municipalities and developers to ensure what it believes is responsible use of the Edwards Aquifer in the Texas Hill Country. Two of its lawsuits resulted in sizable awards of attorney’s fees to the defendants in those suits. One of the defendants, the Lazy Nine Municipal Utility District, assigned its award to Sweetwater Austin Properties, L.L.C. (“Sweetwater”). Unable to pay the awards, S.O.S. filed for bankruptcy in April 2007.
At the five-day confirmation hearing, S.O.S. presented evidence of its strong fundraising history, indicated that it had pledges for $20,000 of the fund after soliciting its top donors, and expressed confidence that it could raise the rest within the sixty-day period. S.O.S.’s executive director testified, however, that it would be difficult to raise the rest of the funds, because many of S.O.S.’s donors wanted to prevent their money from going to judgment creditors in bankruptcy. Moreover, the executive director noted that it would be “extremely difficult” to take money from S.O.S.’s general operating fund, because “[w]e struggle to meet our monthly overhead every month,” and S.O.S. had told its general-fund donors that their money would not go to pay judgment creditors.
S.O.S. contends that the bankruptcy court erred, because Sweetwater has two “non-creditor interests” justifying separate classification. A non-creditor interest can justify separate classification if it gives Sweetwater “a different stake in the future viability” of S.O.S. that may cause it to vote for reasons other than its economic interest in the claim. (citation omitted). If such non-creditor interests in fact exist, they would justify S.O.S.’s classification scheme