CLIENT ALERT: In re Gol Linhas Aéreas Inteligentes S.A. – S.D.N.Y. Strikes Nonconsensual Third-Party Releases from Chapter 11 Plan Under Purdue Precedent

The Supreme Court’s decision in Harrington v. Purdue Pharma L.P., 603 U.S. 204 (2024), which prohibits non-consensual third-party releases in Chapter 11 cases has intensified the debate over how creditor consent must be manifested. One view holds that a creditor’s silence—its failure to affirmatively “opt-out” of the third-party release—constitutes consent. The other view requires demonstrated acceptance and action, requiring the party to affirmatively “opt-in” to the release to show it is consensual. The “opt in” vs. “opt out” issue has been decided differently in courts around the country.

On December 1, 2025, Judge Denise Cote of the United States District Court for the Southern District of New York ruled that the “opt out” third-party release mechanism at issue in the Chapter 11 plan of GOL Linhas Aéreas Inteligentes S.A. (“GOL” or the “Debtors”) was nonconsensual and thus impermissible under Purdue Pharma L.P.[1] The District Court struck the third-party releases and related injunctions from the plan and remanded the case for further proceedings, while leaving the remainder of the plan intact.

In one of the first significant applications of Purdue Pharma L.P., the District Court found that the opt-out mechanism used in the Debtors’ plan did not satisfy the requirement for affirmative consent. The District Court rejected arguments that silence or failure to opt out could be deemed consent, and distinguished the bankruptcy context from class action settlements, where opt-out procedures may suffice under Federal Rule of Civil Procedure 23.

Background

GOL, a major Brazilian airline, filed for Chapter 11 protection in January 2024, with approximately $4.1 billion in outstanding debt. The Debtors’ plan of reorganization, confirmed by the Bankruptcy Court in May 2025, included broad third-party releases binding creditors and their affiliates unless they affirmatively opted out. The United States Trustee (“UST”) objected, arguing that the releases were nonconsensual and unenforceable under both federal and state law.

Bankruptcy Court’s Decision

The Bankruptcy Court overruled the objection, finding the releases to be consensual based on creditors’ failure to opt out and the court’s jurisdiction over the claims. The UST appealed, challenging the Bankruptcy Court’s application of federal law to the question of consent and the sufficiency of the opt-out mechanism.

The Release Structure and Solicitation Results

Article IX.E of the plan provided for releases of claims “based on or relating to” the Debtors, the Chapter 11 cases, and related transactions, and covered a broad set of Released Parties and Related Parties. Creditors eligible to vote received ballots that included an opt-out checkbox, while unimpaired, non-voting creditors received notices with an attached opt-out form.

The Court observed that of 688 ballots mailed to voting creditors, 63 were returned as undeliverable. Of the 617 ballots returned, 323 creditors (over 50%) opted out of the third-party release. For unimpaired creditors, 2,603 notices of non-voting status were mailed, with 69 returned as undeliverable. Only 14 of these notices (0.5 percent of those mailed) were returned, and 11 (almost 80 percent of those returned) of those indicated an opt-out of the release. This indicates that the Court would not assume non-responding creditors received notice or consented through silence to the third-party releases.

District Court Strikes the Third-Party Releases: Analysis

On appeal, the Debtors argued for the application of federal contract law. The District Court, however, found the choice of law issue to be irrelevant, reasoning that the same fundamental principles of contract law would apply under either federal or state law.

The District Court reviewed the Bankruptcy Court’s legal conclusions de novo and focused on whether the third-party releases were truly consensual, as required by the Supreme Court’s Purdue Pharma decision. The District Court found:

• No Consent by Silence: Under both New York state law and general principles of contract law, silence or failure to opt out does not constitute consent to a release, absent a duty to respond or a contemporaneous agreement. The District Court noted that the Debtors did not establish any such duty or agreement.
• No Assumption of Notice: The extremely low response rate from unimpaired creditors raised concerns about whether notice alone was sufficient to establish consent, as the vast majority of these creditors did not return the opt-out form or otherwise respond. The Court noted that the lack of responses further undermined any argument that silence or inaction could be deemed valid consent to the releases.
• Opt-Out Mechanism Insufficient: While the opt-out procedure provided notice, it did not transform non-response into affirmative consent. The District Court distinguished the bankruptcy context from class action settlements, where opt-out procedures are governed by specific rules and safeguards not present here.
• Federal and State Law Aligned: The District Court determined that there was no material conflict between federal and state law on the issue of consent, and both require an objective manifestation of assent to be bound by a release.
• Supreme Court Precedent Controlling: The District Court applied Purdue Pharma, which prohibits nonconsensual third-party releases in Chapter 11 plans, and found the releases at issue to be nonconsensual and therefore barred.

Accordingly, the District Court struck the third-party releases and related injunctions from GOL’s plan and remanded the case for further proceedings.

Takeaway

Parties proposing Chapter 11 plans in the Southern District of New York should be aware that courts may now require creditors or stakeholders to affirmatively “opt-in” to the third-party releases in order for the releases to be deemed consensual. Opt-out mechanisms may be insufficient to establish consent, and broad non-debtor releases that do not obtain affirmative agreement from creditors are likely to be challenged and invalidated.

Please contact the attorneys below if you would like to discuss further or have any questions.

[1] See In re Gol Linhas Aéreas Inteligentes S.A., et al., No. 25-cv-4610 (DLC), 2025 WL 1591830 (S.D.N.Y. Dec. 1, 2025).

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