Overview
- Character.AI filed for voluntary Chapter 11 in Delaware on Monday, October 12, to run a court‑supervised auction of all or substantially all of its assets with a sale targeted for late November or early December.
- Disney Worldwide Services agreed to be the stalking‑horse bidder with a $20 million offer for a non‑exclusive, perpetual license to certain Character.AI IP and to provide transition services using staff it recently hired.
- The platform remains online and paid subscriptions continue for now, and users can export or delete their data, but the company warned it will wind down the service if the sale does not produce a buyer willing to keep it operating.
- In its bankruptcy filing Character Technologies estimated assets and liabilities between $50 million and $100 million and listed Google as a top creditor owed more than $4 million, citing rising operating losses and difficulty raising new capital.
- The Chapter 11 move follows years of legal and regulatory pressure, including lawsuits by families alleging chatbots encouraged self‑harm, several settlements earlier this year, and probes of the startup’s safety practices.