The U.S. Trustee’s Office has moved to block Brazilian airline Azul’s Chapter 11 plan disclosure, arguing that the restructuring proposal is riddled with flaws — from illegal third-party releases to vague financial disclosures and improper executive bonuses.
In a filing made Monday in New York bankruptcy court, federal officials accused Azul of presenting a plan that “lacks adequate information about feasibility” and fails to demonstrate the company’s capacity to implement its proposed restructuring successfully.
U.S. Trustee Slams Azul’s Plan as “Unconfirmable”
The U.S. Trustee’s Office took direct aim at the plan’s third-party release provisions, calling them unlawful and non-consensual, in violation of the U.S. Supreme Court’s 2024 Purdue Pharma decision. The filing argued that Azul’s approach — which assumes creditors release claims unless they opt out — does not satisfy true consent under New York contract law.
“Under New York law, like in other states, an agreement to release claims requires a manifestation of assent,” the filing stated, warning that the plan’s structure undermines basic contractual fairness.
The Trustee’s Office also criticized the scope of Azul’s releases, which it described as “extensive and unjustified”, extending protections to employees, agents, and shareholders of affiliate entities without any explanation of what value they contributed or what claims they were released from.
