Israeli court rejects Papaya Gaming debt plan to repay Skillz

• Papaya says it has approximately $151m in cash and remains profitable.
• The court has appointed an arrangement manager to help develop a revised plan.
• Skillz is seeking to recover the full judgment amount of $719m plus additional awarded costs.

An Israeli court has rejected Papaya Gaming’s request to put its proposed debt settlement to a creditor vote, saying the company should strengthen the plan to repay approximately $730 million to Skillz.

Judge Lushi-Abudi ruled on August 26th that Papaya’s proposal, which relies solely on profits from its continuing operations, does not provide enough certainty for creditors. 

The court said the plan should include additional sources of funding, such as new investment or other capital.

An arrangement manager, Attorney Gil Oren of Arnon, Tadmor-Levy, has been appointed to work with Papaya and its creditors on a revised proposal. The Israeli proceedings remain subject to a temporary 45-day pause on collection efforts that began on August 3rd.

Funding options

Papaya told the court it has approximately $151m in cash and remains profitable, with gross margins above 90% in recent years. Its original proposal would have funded repayments from operating profits over six and a half years.

The judge also suggested that Papaya managers and shareholders who received dividends could contribute capital. Papaya’s attorneys said the company distributed a $10m dividend at the end of 2025.

Skillz is seeking the full judgment amount after a US court ordered Papaya to pay $719m in disgorgement, plus approximately $10m in legal fees and certain costs.