The article analyzes the district court’s decision in In re Gol Linhas Aéreas Inteligentes, S.A., which struck an opt‑out third‑party release and related injunction from a confirmed plan on the ground that “consent cannot be implied from silence” under both New York contract law and federal common law.

The authors explain that, although Purdue Pharma preserved the possibility of consensual third‑party releases, it left open what counts as “consent,” prompting a split among bankruptcy courts over whether failure to opt out, with notice, is enough. They contrast decisions in New York and Texas that have treated opt‑out structures as valid manifestations of creditor consent with Gol Linhas, where Judge Denise Cote held that neither submission to bankruptcy court jurisdiction, class‑action opt‑out concepts, nor analogies to default judgments can transform creditor silence into an enforceable release of non‑debtor claims.

The article highlights Gol Linhas as a significant warning shot for plan proponents that commonly used opt‑out releases may be vulnerable on appeal in the wake of Purdue, particularly where there is no affirmative creditor act evidencing “mutual assent.” The authors note that the debtors have appealed the decision, meaning the Second Circuit (and potentially the Supreme Court) may soon be forced to clarify the boundaries of consensual third‑party releases, with important implications for Chapter 11 practice and forum selection.

Read the full article here.