Skillz Platform has stepped up its effort to prevent Papaya Gaming from securing Chapter 15 bankruptcy protection in the United States as the two mobile gaming companies continue their dispute over a $719 million judgment.
Skillz, which is owned by Firy Inc., is asking the US Bankruptcy Court for the District of Delaware to refuse recognition of insolvency proceedings that Papaya previously opened in Israel. Papaya filed its Chapter 15 petition in Delaware in early August, seeking US recognition of the Israeli process and protection from enforcement action while the proceedings continue.
The bankruptcy case follows a major defeat for Papaya in federal court. In April 2026, a jury in the Southern District of New York found the company liable for false advertising after Skillz accused it of using computer-controlled opponents in games marketed as competitions between human players.
US District Judge Denise Cote subsequently awarded Skillz $719 million in disgorgement of Papaya’s profits on July 27, replacing the jury’s earlier $420 million damages award. The court also awarded approximately $10.1 million in legal fees and certain costs.
Skillz challenges Chapter 15 strategy
Skillz argues that Papaya’s Chapter 15 case does not resemble a conventional cross-border restructuring involving a broad group of creditors. Instead, it claims the insolvency process is primarily intended to prevent enforcement of the US judgment while Papaya pursues an appeal.
The company has also questioned whether the Israeli proceedings should qualify for recognition in Delaware, arguing that Papaya has significant commercial and financial connections to the United States.
Papaya’s Chapter 15 petition was filed with the Delaware bankruptcy court on 2 August and is being handled by Judge Mary F. Walrath. The court later granted temporary protection preventing certain collection efforts against Papaya’s US assets while it considers whether the Israeli proceeding should receive formal recognition.
Skillz previously sought additional safeguards, including financial security and restrictions on transferring funds, but those requests were not granted alongside the temporary injunction.
Israeli repayment proposal rejected
Papaya has also encountered resistance in Israel over its proposed approach to repaying creditors.
In August, the Tel Aviv District Court declined to send Papaya’s proposed settlement to creditors for a vote. The plan relied largely on operating profits to repay its obligations over several years, but the court said additional sources of capital should be included.
The Israeli court also raised the possibility that shareholders or executives who had received distributions could contribute funds. Papaya’s lawyers said during the proceedings that the company had distributed a $10 million dividend at the end of 2025.
Papaya is separately challenging the New York judgment in the US Court of Appeals for the Second Circuit. Its appeal was formally docketed on 31 August.
Until the Delaware court decides whether to recognize the Israeli insolvency proceedings, Papaya remains temporarily protected from some US collection measures. Skillz, meanwhile, continues to pursue enforcement of the judgment and is seeking to prevent Chapter 15 from becoming a barrier to recovering the money awarded by the New York court.