An Israeli court has rejected Papaya Gaming’s proposed debt restructuring plan, citing insufficient funding guarantees and ordering the company to broaden its repayment sources beyond projected operating profits.
The District Court of Tel Aviv-Jaffa declined to convene creditors’ meetings to vote on the six-and-a-half-year proposal, which envisaged funding a court-supervised fund through ongoing operations. Judge Iris Lushi-Abudi ruled that Papaya must enhance the plan by including additional funding mechanisms such as a rights offering, new investor participation, or alternative capital sources.
Attorney Gil Oren has been appointed as arrangement manager to facilitate revised negotiations between Papaya and its creditors. The company remains under a temporary 45-day pause on collection efforts, initiated on August 3, while it pursues Chapter 15 bankruptcy protection in Delaware to secure recognition of the Israeli insolvency proceeding.
The court’s decision follows a July 27 U.S. District Court order requiring Papaya to pay $719 million in disgorgement of profits from false advertising, alongside $10 million in attorney fees. Papaya’s obligations stem from an April jury verdict awarding Skillz Platform Inc.—a wholly owned subsidiary of Firy Inc.—$420 million in damages for the same cause.
Papaya currently holds approximately $151 million in cash and distributed a $10 million dividend at the end of 2025. Its counsel has cited gross margins exceeding 90% in recent years, though the court found these projections insufficient to underpin the restructuring plan without additional funding assurances.
Firy Inc.’s shares closed at $9.84 in after-hours trading, reflecting market reaction to the court’s ruling and the ongoing legal and financial pressures facing Papaya Gaming.
