Tel Aviv Court Appoints Administrator to Restructure Papaya Gaming Debt Amid $719 Million US Judgment
Translated & summarized from Calcalist by baba
The Tel Aviv District Court appointed an administrator to help Papaya Gaming restructure its debts after a $719 million US court judgment favored competitor Skillz. Papaya received a 45-day stay to improve its debt settlement plan, aiming to avoid liquidation while appealing the ruling. The company is cash-flow insolvent with $754 million in debts, mostly from the US judgment, and is working to prevent enforcement actions during ongoing legal proceedings.
The story in 6 lines · by baba
- Tel Aviv court granted Papaya Gaming a 45-day stay and appointed a debt arrangement administrator.
- Papaya faces $719 million judgment from a US federal court favoring competitor Skillz.
- Judge rejected liquidation, citing potential significant value loss for Papaya.
- Current debt settlement plan deemed insufficient, relying only on future revenues without guarantees.
- Papaya is cash-flow insolvent with $754 million debts and $151 million cash on hand.
- US bankruptcy court granted Papaya a temporary injunction against enforcement actions in the US.
The Tel Aviv District Court approved Papaya Gaming's request for a 45-day temporary stay of proceedings and appointed attorney Gil Oren from Yigal Arnon & Co. as the arrangement administrator. Oren will work to develop an improved debt settlement plan with the company's creditors. This decision follows a severe financial crisis triggered by a $719 million federal court judgment in New York against Papaya, favoring its competitor Skillz. Judge Iris Lushi-Avudi rejected Skillz's request to move to liquidation, citing significant value loss risks, but found Papaya's current settlement proposal inadequate as it relies solely on future revenues without guarantees or owner contributions.
Papaya Gaming develops and markets skill-based mobile games that allow players to compete in cash prize tournaments. Its American subsidiary, incorporated in Delaware, provides payment processing services to the Israeli parent company, with most revenue coming from the US market. Financial analysis presented to the court showed the companies are currently cash-flow insolvent, with debts totaling approximately $754 million against only $151 million in cash. The bulk of the debt stems from the July 27 New York federal court ruling in favor of Skillz, which found Papaya liable for misleading advertising by presenting games as human-player tournaments while allegedly using bots.
The jury initially awarded $420 million in damages, later upheld at $719 million after Papaya's appeals were denied. Papaya announced plans to appeal the ruling. In Israel, Papaya proposed a debt settlement plan involving payment installments and channeling future profits into a special fund managed by the arrangement administrator over seven years to fully repay debts. Skillz opposed this and demanded full liquidation proceedings, including appointing a trustee to investigate company management.
Papaya's goal with the Israeli arrangement is to prevent unilateral enforcement actions that could disrupt operations during the US appeal process. The initial plan estimated depositing around $100 million into the fund in 2026, with additional tens of millions annually. Concurrently, on August 9, a Delaware federal bankruptcy court granted Papaya a temporary injunction halting collection and enforcement actions against its US assets. Skillz opposed this and requested collateral or transfer restrictions, but these were denied for now.
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