In Re: Gol Linhas Aereas Inteligentes S.A.

Background

GOL Linhas Aéreas Inteligentes S.A. and affiliated debtors and debtors in possession filed a voluntary Chapter 11 bankruptcy case in the Southern District of New York on January 25, 2024. The Bankruptcy Court confirmed the debtors’ Fifth Modified Third Amended Joint Chapter 11 Plan of Reorganization on May 21, 2025.

The Plan contained a third-party-release provision. In general terms, the provision released claims connected to the debtors, the bankruptcy cases, financing, securities or debt instruments, contracts, the restructuring, and the Plan. Creditors who did not affirmatively opt out through the applicable ballot or notice were treated as releasing covered claims. The confirmation order also included an injunction that would permanently bar actions to enforce released claims against the released parties after the Plan became effective.

The United States Trustee objected to the releases and related injunction. The Bankruptcy Court overruled that objection. The Trustee appealed those provisions and sought a stay pending appeal, meaning an order pausing their operation while the appeal proceeded. The Bankruptcy Court denied that request. The district court initially imposed an interim stay of the release and injunction provisions, then held a conference on June 5.

Arguments and governing standard

The Trustee argued that the Plan could not release claims creditors held against third parties without the creditors’ explicit consent. According to the Trustee, a creditor’s failure to opt out did not constitute consent under New York contract law. The debtors, the Official Committee of Unsecured Creditors, and Abra opposed the stay.

The district court explained that a stay pending appeal is discretionary rather than automatic. It considered four factors: the applicant’s likelihood of success on the merits, irreparable injury without a stay, harm to other interested parties, and the public interest. The first two factors were especially important, and the Trustee had the burden of showing that a stay was justified.

Court’s analysis

Likelihood of success. The court stated that the appeal presented a serious legal issue concerning whether a bankruptcy plan may impose non-consensual third-party releases through an opt-out process. The Bankruptcy Court had concluded that federal law, rather than state contract law, governed the releases; that implied consent could be established through the opt-out process; and that the releases were knowing and voluntary, essential to the Plan, and directly affected the bankruptcy estate’s property. The district court followed the Bankruptcy Court’s assessment that the appeal raised a sufficiently serious question for appellate review.

Irreparable injury. The Trustee argued that without a stay, the appeal could become ineffective because of equitable mootness. Equitable mootness is a doctrine allowing a court to decline to disturb a bankruptcy reorganization when doing so would be inequitable after implementation. The district court found that the Trustee had not shown this harm. The debtors, the committee, and Abra had agreed not to argue that equitable mootness applied. The Trustee also acknowledged that effective relief could be provided on appeal by removing the third-party release from the Plan and that applying equitable mootness would be particularly inequitable in light of the agreements.

Balance of equities and public interest. The court found that these factors weighed decisively against a stay. The record described the Plan as the product of substantial negotiation, discovery, and investigation and as providing recoveries to unsecured creditors who might otherwise receive nothing. The court also noted evidence that the releases were important to the Plan, that the debtor-in-possession financing facility was approaching maturity, and that continuing in bankruptcy imposed substantial daily costs. The court concluded that a stay could harm the debtors, the reorganization, and unsecured creditors. It further concluded that the public interest favored allowing the bankruptcy case to proceed while preserving the Trustee’s appeal.

Disposition

The court vacated its June 3, 2025 order imposing an interim stay of the third-party-release and related-injunction provisions. It denied the United States Trustee’s June 2, 2025 motion for a stay pending appeal. This opinion decided the request for a stay; it did not decide the underlying appeal about the legality of the releases.