US Court Grants Papaya Gaming Temporary Relief Halting Asset Collection Proceedings

The US Federal Bankruptcy Court in Delaware, led by Judge Mary F. Walrath, approved Papaya Gaming's request for temporary relief, immediately suspending collection and enforcement actions against the company's assets in the United States. This decision preserves the status quo until a hearing on Papaya's formal recognition petition under Chapter 15 of the US Bankruptcy Code. This ruling follows a similar temporary injunction issued days earlier by Judge Iris Lushi-Abudi at the Tel Aviv-Jaffa District Court, where Papaya sought a supervised payment plan to maintain regular operations while appealing a judgment against it.

Papaya's competitor, Skillz (now operating as FIRY Inc.), strongly opposed the relief, demanding Papaya post a significant financial bond or restrict fund transfers outside the US. Judge Walrath rejected these demands, fully siding with Papaya. Papaya responded positively to the ruling, stating it provides the necessary certainty to continue normal operations while responsibly pursuing its legal appeal.

The legal background stems from a late July 2026 ruling by Federal Judge Denise Cote in the Southern District of New York, which upheld a jury verdict that Papaya used automated bots in skill-based game tournaments, presenting them as human players. Papaya was ordered to pay approximately $719 million in disgorgement plus $10.1 million in legal fees. However, the court denied Skillz's request for a permanent injunction banning Papaya's operations or requiring corrective notices in its apps.

Following the New York ruling, Papaya sought temporary relief in Israel, proposing that free cash balances and current profits be placed in a court-supervised fund to protect creditor rights during the appeal. To prevent Skillz from unilaterally seizing US assets before the appeal decision, Papaya filed the Chapter 15 petition in Delaware. Judge Walrath's ruling now provides Papaya with a legal safety net in the US, allowing it to continue operating its apps and gaming platform while preparing to appeal the federal judgment to the Second Circuit Court of Appeals.