Tel Aviv Court Appoints Administrator for Papaya Gaming Debt Settlement and Freezes Proceedings

The Tel Aviv District Court, led by Judge Iris Lushi-Avudi, approved Papaya Gaming's request to appoint a settlement administrator and imposed a 45-day temporary stay on legal proceedings against the company. Attorney Gil Oren from Yigal Arnon & Co. was appointed as the settlement administrator to formulate a debt arrangement and present it to creditors during meetings. The stay was granted to allow time for the settlement process.

Papaya Gaming welcomed the court's decision, calling it a significant achievement that provides the company with the certainty needed to continue its regular operations. The company pledged full cooperation with the settlement administrator to advance an optimal agreement and expressed confidence in its approach. This ruling in Israel follows a similar decision by a Delaware court in the United States, which granted Papaya Gaming temporary relief from collection and enforcement actions despite opposition from Skills.

Judge Lushi-Avudi emphasized that the settlement must be based on a combined model, incorporating ongoing business operations, owner contributions, and the possibility of finding an investor. This approach aims to enhance and secure the debt repayment forecasts established by the U.S. court, which ordered Papaya Gaming to pay $718 million in damages. Papaya Gaming intends to appeal the U.S. court's ruling.

The judge noted that the companies seek to offer creditors a debt settlement ensuring up to 100% repayment despite cash flow insolvency. The proposed settlement includes continued company operations with profits held in a special fund managed by the settlement administrator for seven years. However, the current settlement relies solely on income from ongoing operations without guarantees or owner contributions, prompting the judge to require an improved model incorporating additional revenue sources.

This legal development comes amid a broader context of significant corporate negotiations, including a major commercial deal involving Meta valued at approximately $17 billion, and ongoing efforts by Israel's Accountant General and the IDF to implement new budget oversight systems.