Papaya Gaming wins U.S. bankruptcy protection after $719 million ruling
A Delaware judge temporarily blocked collection efforts against Papaya’s U.S. assets as the Israeli gaming company seeks Chapter 15 recognition and prepares to appeal a ruling over the use of bots.
The U.S. Bankruptcy Court for the District of Delaware, presided over by Judge Mary F. Walrath, has granted Papaya Gaming’s motion for a temporary injunction, immediately staying collection and enforcement proceedings against the company’s U.S. assets and preserving the status quo pending a hearing on Papaya’s petition for formal recognition under Chapter 15 of the U.S. Bankruptcy Code.
The U.S. decision follows a temporary stay of proceedings granted several days earlier by Judge Iris Lushi-Abudi of the Tel Aviv District Court. As part of the Israeli proceedings, Papaya asked the court to approve a supervised payment plan that would allow the company to continue its regular operations while it pursues an appeal of the ruling against it.
The temporary relief was granted despite strong opposition from Papaya’s competitor, Skillz, which now operates under the name Firy Inc. During the Delaware hearing, Skillz argued that Papaya should be required to post a substantial financial guarantee or, alternatively, face restrictions on transferring funds outside the United States.
Judge Walrath rejected Skillz’s demands and granted Papaya’s request.
“We welcome the Delaware court’s decision, which gives the company the certainty necessary to continue its regular operations until the recognition hearing,” Papaya said in a statement. “We will continue to conduct the process responsibly and with faith in the justice of our path.”
The latest developments follow a ruling issued in late July 2026 by Federal Judge Denise Cote of the U.S. District Court for the Southern District of New York. The ruling adopted a jury’s finding earlier this year that Papaya had used automated computer programs, or “bots,” in skill-based gaming tournaments while presenting them as human players.
Judge Cote ordered Papaya to pay approximately $719 million in disgorgement, as well as approximately $10.1 million in attorneys’ fees and legal costs. She also rejected Skillz’s request for a permanent injunction that would have prohibited Papaya from operating or required it to post corrective notices on its apps.
Following the ruling, Papaya applied to the Tel Aviv District Court for a temporary stay of proceedings. Under the proposed arrangement, the company’s available cash and current profits would be transferred to a designated fund held by an authorized representative on behalf of the court. The arrangement was intended to safeguard creditors’ rights if Papaya’s appeal is ultimately rejected.
Papaya subsequently filed for Chapter 15 recognition in Delaware, seeking to prevent Skillz from taking unilateral action to seize U.S. assets while the appeal is pending.
Judge Walrath’s temporary injunction now provides Papaya with legal protection in the United States while the Chapter 15 proceedings move forward. The company can continue operating its apps and gaming portfolio as it prepares to appeal the underlying ruling before the U.S. Court of Appeals for the Second Circuit.
