Delaware court freezes Papaya Gaming's US assets amid $730m Skillz fight

A US bankruptcy court has barred Papaya Gaming from moving money out of its US bank accounts while the mobile publisher faces a judgment of roughly $730 million owed to Skillz. The US Bankruptcy Court for the District of Delaware issued the order on October 27th, after a three-day hearing in which Skillz challenged Papaya's bid to have its Israeli insolvency proceedings recognized in the US.

The ruling lands hard. Papaya must now fund permitted ordinary-business payments from accounts held outside the US, transferring 115% of each payment's value before the payment goes out. That's a premium, not a penalty in name, but it functions as both. The company cannot transfer money to shareholders, insiders or affiliated businesses at all, and it must report payments to Skillz's lawyers and the US Trustee.

What did the court find troubling?

Plenty. The court flagged Papaya's handling of its own finances, including a transfer of more than $70 million from a US bank account to Israel before its April trial. The court found Papaya had not disclosed that transfer to the New York court, and that it prejudiced Skillz and other US creditors. Moving nine figures abroad quietly, then asking a US court to bless your foreign restructuring, is a strategy with a short shelf life.

The restrictions trace back to a unanimous federal jury verdict in April 2026, which found Papaya liable for false advertising. A subsequent ruling ordered the company to pay $719 million in disgorgement, plus roughly $10 million in legal fees and costs — the arithmetic behind the $730 million headline figure. Papaya has appealed. It has not posted a bond to secure payment, which tells you how confident it is, or how liquid it isn't.

What changes for the parties involved?

For Skillz, the order is leverage. Its legal team now gets visibility into Papaya's payment flows, and every permitted transaction costs Papaya a 15% buffer drawn from non-US funds. For Papaya's US creditors, the freeze reduces the risk of further value draining out of reach before claims get sorted. For Papaya's shareholders and affiliates, the taps are off.

The Israeli insolvency proceedings continue regardless. Creditors are scheduled to vote on a revised repayment proposal on November 8th, 2026 — the next concrete checkpoint in a restructuring now operating under Delaware's supervision. The Delaware court's restrictions remain in place until further order, meaning Papaya negotiates that vote with one hand tied.

The appeal is the wildcard. If Papaya overturns the April verdict, the $730 million question dissolves. If it doesn't, and no bond materializes, Skillz will keep pressing for every dollar it can reach. Watch the November 8th creditor vote and whether Papaya posts a bond before then — the gap between what the company promises in Tel Aviv and what it secures in Delaware will tell the story.