UPDATE 1: Gol Debtors Appeal District Court Decision Reversing Plan Confirmation, Striking Opt-Out Nondebtor Releases

Wed Jan 07, 2026 04:25 PM ET: Today the Gol Linhas Aéreas Inteligentes debtors appealed Judge Denise Cote’s Dec. 2 decision reversing their plan confirmation order and striking the plan’s opt-out nondebtor releases (discussed below) to the U.S. Court of Appeals for the Second Circuit.

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Original Story 12:47 p.m. UTC on Dec. 2, 2025

SDNY Strikes Down Gol Airlines Confirmation Order Over Opt-Out Nondebtor Releases in Litigation Win for UST

Judge Denise Cote of the Southern District of New York issued an opinion reversing the Gol Linhas Aéreas Inteligentes SA plan confirmation order and striking the plan’s opt-out nondebtor release provisions. The judge finds the releases nonconsensual under state law and federal law – and therefore unlawful under the U.S. Supreme Court’s Purdue Pharma decision.

Bankruptcy Judge Martin Glenn confirmed Gol’s plan in May, overruling the sole outstanding objection from the U.S. Trustee. The UST argued that creditors’ failure to opt out of nondebtor releases does not constitute consent to the releases. Judge Cote agrees. Her ruling is one of the first district court decisions to address the contours of “consent” to nondebtor releases after Purdue.

The Brazilian airline’s plan went effective in June, eliminating about $1.6 billion of prepetition funded debt and up to $800 million of other obligations of the company. Parent and secured creditor Abra retained control of the company by equitizing more than half its 2028 secured note claims, while unsecured creditors received about 15% of post-reorg equity.

The UST appealed the confirmation ruling to the district court, and Judge Cote’s opinion, dated Dec. 1, appears to have been docketed today. She issued the ruling without hearing oral argument.

The nondebtor releases at the heart of the appeal provide that “releasing parties” – including claimholders who voted to accept the plan, unimpaired claim and interest-holders, and claimholders entitled to vote but who did not vote or voted to reject – who do not affirmatively opt out would grant a release to the “released parties.” Those released parties include consenting stakeholders who entered the plan support agreement, the UCC, the DIP noteholders, the ad hoc group of Abra noteholders, Elliott and their respective related parties.

In today’s opinion, Judge Cote observes that 688 ballots were mailed to creditors who were eligible to vote, 63 were returned as undeliverable, and of the 617 creditors who returned a ballot, 323 opted out of the nondebtor releases. The debtors also sent 2,603 notices of nonvoting status (with attached opt-out forms) to creditors ineligible to vote. Some 69 were returned as undeliverable, and of the 14 returned, 11 had the opt-out box checked.

Judge Cote strikes down key findings in Judge Glenn’s May 23 confirmation opinion. Judge Glenn ruled that federal law, not state law, decides whether nondebtor releases are consensual. He reasoned that applying state contract law would be unworkable because it would require “engag[ing] in untold numbers of individualized choice-of-law analyses.” Judge Glenn also held that the nondebtor releases are consensual because creditors impliedly consented to the release by consenting to the bankruptcy court’s jurisdiction, the released claims affect the debtors’ estate, and there was adequate service of process, as shown by the opt-out response rate.

On appeal, most of the parties’ briefing was devoted to the choice of law issue, Judge Cote observes, but “it is not necessary to decide whether federal or state law controls.” The district judge says the “same general principles of contract law apply under both federal and state law, so there is no conflict,” and the nondebtor releases in the Gol plan are unlawful either way (emphasis added).

Addressing state law first, Judge Cote says the bankruptcy court conceded that state law generally “does not recognize silence as consent to a contract.” Moreover, the debtors “do not seriously dispute” that the nondebtor releases would violate New York state law, according to the opinion. Gol acknowledged that the creditors had no duty to respond to the opt-out opportunity and does not claim that the creditors made “any contemporaneous oral agreement” to the nondebtor releases, Judge Cote explains.

Instead, the district judge continues, the debtors contended creditors’ silence is “sufficient to impute consent” because the released parties made substantial contributions to the bankruptcy and the creditors had the opportunity to decline the releases. Even if they had no duty to respond, the “failure to [respond] may indeed carry consequences,” in Gol’s view.

However, Judge Cote finds the debtors “fail to cite any authority to support their first two arguments” and rest their third argument on the Avianca confirmation ruling, a “pre-Purdue bankruptcy decision that grounds its reasoning in class action law, not state contract law.”

Applying federal law – which Gol said controls – Judge Cote still finds the opt-out nondebtor releases nonconsensual and unlawful under Purdue. She writes that under general principles of contract law, “consent cannot be implied from silence,” and the debtors “raise arguments with little to no supporting authority” to argue otherwise.

Judge Cote outlines the debtors’ position that under federal law, a party that consents to adjudication by a bankruptcy court also consents to the bankruptcy court’s “disposition of its claims,” including the imposition of nondebtor releases. “But even assuming the creditors here consented to the bankruptcy court’s adjudication,” according to the opinion, “it does not follow that all parties that consent to a bankruptcy court’s jurisdiction necessarily consent to any release the court may approve” (emphasis added). Judge Cote adds that the debtors did not “cite any case in which a court made that logical leap.”

The debtors also tried to import a rule from the class action context in which “opt-out procedures, accompanied by sufficient notice, satisfy the Due Process Clause” and establish the consent of parties to be joined in a class settlement, Judge Cote explains. But the judge emphasizes that Federal Rule of Civil Procedure 23 provides the mechanism for establishing a class and the procedures for protecting the rights of members of a certified class.

“The opt-out mechanism utilized in the class action context simply does not apply to the third-party release here,” Judge Cote finds (emphasis added). She notes there is no suggestion that the releasing parties “are members of a defined class certified to litigate or settle defined claims or that the Rule 23 procedures and its safeguards have been followed.”

Finally, Judge Cote rejects Gol’s analogy between opt-out nondebtor releases and default judgments, which can be entered against parties who fail to respond to pleadings. The debtors again “fail to identify any opinion in which a court adopted this reasoning to find that a failure to opt out was sufficient to imply consent,” let alone consent to nondebtor releases, she writes.

The district judge also highlights that creditors had no duty to respond to the opt-out opportunity. Courts “do not enter default judgments when parties have no duty to respond,” the judge says.

“The Bankruptcy Court’s May 21, 2025 Confirmation Order is reversed and the third-party release and corresponding injunction are stricken from the plan,” Judge Cote concludes. She remands the case to the bankruptcy court for further proceedings.