A US bankruptcy court has restricted Papaya Gaming from transferring money out of its US bank accounts as the company faces a judgment of approximately $730 million owed to Skillz.

The US Bankruptcy Court for the District of Delaware issued the order on October 27th, following a three-day hearing in which Skillz challenged Papaya's request to have its Israeli insolvency proceedings recognised in the US.

Under the ruling, Papaya must fund permitted ordinary business payments from accounts outside the US, transferring 115% of each payment amount before it can be made. 

The company is also prohibited from transferring money to shareholders, insiders or affiliated businesses and must report payments to Skillz's lawyers and the US Trustee.

The court raised concerns about Papaya's handling of its finances, including a transfer of more than $70m from a US bank account to Israel before its April trial. 

The court found that Papaya had not disclosed the transfer to the New York court and that it had prejudiced Skillz and other US creditors.

The restrictions follow a unanimous federal jury verdict in April 2026, which found Papaya liable for false advertising. A subsequent ruling ordered the company to pay $719m in disgorgement, alongside around $10m in legal fees and costs.

Papaya has appealed the judgment but has not posted a bond to secure payment.

The Israeli insolvency proceedings will continue, with creditors scheduled to vote on a revised repayment proposal on November 8th. The Delaware court's restrictions will also remain in place until further order.

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