Delaware bankruptcy judge bars Papaya Gaming offshore asset transfers
Regulation1 min read
In brief
- Judge Mary Walrath ordered Papaya Gaming Inc. on 27 October to stop moving assets from US accounts offshore.
- Ordinary-course transactions must be reported to the US trustee and pre-funded at 115%.
- Payments to affiliates and insiders are barred.
- Papaya is to present a new payoff outline before the Tel Aviv stay expires on 25 November.
On Oct. 27, US Bankruptcy Judge Mary Walrath told Papaya to stop shifting assets from its US accounts into offshore holdings. A Delaware federal bankruptcy judge has barred Papaya Gaming from sending assets abroad while the company restructures its debt in Israel.
Under the order, ordinary-course transactions go to the US trustee confidentially and must be pre-funded at 115% of the amount paid. Payments to affiliates and insiders are also off limits for Papaya.
A federal jury in the Southern District of New York concluded in April that Papaya caused financial harm to Skillz Platform Inc., a Firy Inc. subsidiary, through false advertising. US District Judge Denise Cote directed Papaya to hand Skillz $719 million of unjust profits through disgorgement, and Papaya responded by seeking Chapter 15 cross-border bankruptcy protection. Skillz objected, but Walrath recognized the Israeli debt restructuring anyway. Consequently, the Tel Aviv case is the main proceeding, while the US case is the nonmain one.
Papaya is expected to present a new payoff outline in the coming days. The Tel Aviv District Court’s temporary stay of proceedings is set to expire on Nov. 25.