SDNY reverses confirmation order and strikes opt-out third-party releases in Gol Linhas Aéreas bankruptcy case

Overview of the Ruling

On December 1, 2025, Judge Denise Cote of the U.S. District Court for the Southern District of New York reversed confirmation of Brazilian airline Gol Linhas Aéreas Inteligentes S.A.’s chapter 11 plan,¹ striking the plan’s opt-out third-party release provisions included in the plan. The decision, which follows the U.S. Supreme Court’s decision in Harrington v. Purdue Pharma L.P.,² underscores that consent to third-party releases cannot be implied from silence or failure to opt out under general principles of contract law. The case has been remanded to the bankruptcy court for further proceedings.

Gol commenced its chapter 11 case in January 2024 and confirmed a plan of reorganization in May 2025. The plan included broad third-party releases binding creditors who did not affirmatively opt out of the releases. The U.S. Trustee, who objected to plan confirmation, appealed the confirmation order to the district court, challenging the plan’s third-party releases and related injunction provisions. The U.S. Trustee argued that, under both state and federal law, creditors’ failure to opt out did not imply consent, and the district court reversed. Interpreting the meaning of “consensual” in light of Purdue, the court struck the third-party releases and related injunctions from the plan.

The District Court’s Reasoning

The court’s decision was based on several key points:

Choice of Law Is Not Dispositive

The court declined to resolve whether state or federal law controls because “the same general principles of contract law apply under both.” Under the general principles of state and federal contract law, consent cannot be implied from silence, except in rare circumstances. This finding neutralized Gol’s argument that federal law should control and underscored that the outcome would be the same under either framework.

State Law Analysis

Under New York contract law, silence does not constitute acceptance absent a duty to respond or a contemporaneous oral agreement. The court noted that creditors had no obligation to return ballots or opt-out forms, and Gol conceded this point. Gol’s arguments—that substantial contributions by released parties and the opportunity to opt out were enough to reflect consent—were unsupported by authority. The court dismissed Gol’s reliance on In re Avianca Holdings S.A.,³ a pre-Purdue decision grounded in class action principles rather than state contract law.

Federal Law Analysis

The court emphasized that generally accepted principles of contract law govern, and consent cannot be implied from silence. Judge Cote rejected Gol’s argument that, under federal law, consent to bankruptcy court jurisdiction equates to consent to third-party releases, calling it a “logical leap” unsupported by precedent. Similarly, Gol’s analogy to class action opt-out mechanisms failed because class actions involve distinct procedural safeguards—such as Federal Rule of Civil Procedure 23 certification—that were absent here. Finally, the court dismissed Gol’s analogy to default judgments, stating that courts do not enter default judgments when parties have no duty to respond.

Key Takeaways

• Opt-Out ≠ Consent: Silence or failure to opt out does not establish consent to non-debtor releases under either state or federal general principles of contract law.
• Post-Purdue Landscape: Courts are scrutinizing third-party releases more closely to determine what qualifies as a “consensual” release required by Purdue. Although the law around the “consensual” standard is unsettled, this decision signals that opt-out mechanisms alone may be insufficient.
• Plan Drafting Implications: Debtors should consider affirmative consent mechanisms (e.g., check-the-box opt-in) and be prepared for heightened judicial review. This decision does not prohibit opt-out mechanisms; however, the court made clear that the opt-out mechanism “utilized in the class action context simply does not apply to the third-party release here.”
• Risk of Appeal: Plans relying on broad opt-out releases face appellate risk, even if initially confirmed. Debtors should consider the value exchanged for third-party releases and conduct a risk analysis based on a court striking down third-party releases included in a confirmed plan.
• Next Steps: The case returns to the bankruptcy court for proceedings consistent with Judge Cote’s ruling, which may impact similar cases pending in SDNY and beyond. 

Authored by David Simonds (Partner, Los Angeles), and Uchechi Egeonuigwe (Senior Associate, Los Angeles).