Judge Bars Papaya Gaming From Offshore Asset Transfers
A U.S. bankruptcy judge ordered the Israeli mobile gaming operator to keep its assets within the United States while its restructuring proceeds.
Updated on Nov. 3, 2026 in Gambling
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A federal bankruptcy judge barred Papaya Gaming, an Israeli-based mobile gaming operator, from transferring assets outside the United States. The order follows a federal jury finding in April that Papaya harmed Skillz Platform Inc. through false advertising.
Why it matters
The ruling limits how a company convicted of violating federal law can move money while it seeks cross-border bankruptcy protection in the U.S. For users of mobile gaming platforms, it highlights the financial scrutiny applied to operators accused of misleading players.
The court ordered Papaya to pay Skillz $719 million in disgorgement of unjust profits, a sum tied to the federal false advertising finding. Papaya's proposed 6.5-year payment plan to Skillz has not yet been approved in U.S. court, and the Tel Aviv court's temporary stay expires Nov. 25.
The players
Papaya Gaming
Papaya Gaming is an Israeli-based mobile gaming operator that was convicted earlier this year of violating the federal Lanham Act and New York General Business Law.
Skillz Platform Inc.
Skillz Platform Inc. is a mobile gaming platform company that won a federal jury finding of false advertising against Papaya and a $719 million disgorgement order.
Judge Denise Cote
Judge Denise Cote is a U.S. District Judge in the Southern District of New York who ordered Papaya to pay Skillz $719 million in disgorgement of unjust profits.
Judge Walrath
Judge Walrath is the U.S. bankruptcy judge who recognized the Israeli restructuring and barred Papaya from transferring assets outside the United States.
The details
Judge Walrath recognized the Israeli debt restructuring over Skillz's objections and designated the Tel Aviv proceeding as the main proceeding, with the U.S. case as the nonmain proceeding. The order follows a three-day evidentiary hearing in October that revealed the offshore transfers, which occurred while the federal lawsuit was pending in the Southern District of New York.
Timeline
April 2026: A federal jury found Papaya harmed Skillz through false advertising.
Oct. 14-16, 2026: A three-day evidentiary hearing revealed offshore asset transfers.
Oct. 27, 2026: Judge Walrath ordered Papaya to stop offshore asset transfers.
Nov. 25, 2026: The Tel Aviv District Court's temporary stay of proceedings expires.
Legal Context
Papaya's case uses the Chapter 15 framework of the U.S. Bankruptcy Code, which lets foreign restructurings be recognized as main or nonmain proceedings in American courts. The ruling shows how U.S. courts can restrict offshore transfers by a foreign company whose profits were tied to American users.
Players of Papaya's mobile games may see the company's financial restructuring affect how its platforms are run and funded during the bankruptcy process. The ruling also signals that U.S. courts can limit how a foreign operator moves money tied to American users.
The takeaway
Companies that generate significant revenue from American users may find their assets subject to U.S. court control even when they restructure abroad. Readers following online gaming should watch how the payoff plan and Israeli stay of proceedings develop.
What happens next
Papaya is expected to present a new payoff outline in the coming days, and the Tel Aviv District Court's temporary stay of proceedings expires on Nov. 25, 2026.
Further reading
For more on how online gaming companies are regulated, explore Gambling coverage on Wisevoter.
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