Character.AI seeks Chapter 11 sale with Disney bid of $20 million

Character Technologies filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the District of Delaware.[1] Character.AI says it entered the process to pursue a court-supervised sale of all or substantially all of its assets.[2] The company says its board selected that route because it believes the process offers the best opportunity to maximize value for stakeholders.[2] The filing therefore begins a sale process; the evidence describes Disney’s transaction as a proposed deal and its offer as a baseline, not as a completed transfer.[3][5]

Disney’s bid is $20 million for certain assets that have not been disclosed.[4] The bid would establish a baseline offer while allowing competing bidders to submit higher offers.[3] The proposed transaction also includes a permanent, nonexclusive license to some Character.AI intellectual property and certain legal claims.[5] Disney would provide transition support using former Character.AI employees it has hired.[4] Character.AI expects the court-supervised sale process to finish by late November or early December 2026.[3] The evidence does not identify the assets covered by the bid or establish that Disney will be the final buyer.[3][4]

Character.AI says it intends to keep operating its business, including the platform, with minimal service disruptions while the sale proceeds.[3] The company says users can access all services and that subscriptions remain active, with billing unchanged for now.[2] That is the company’s stated plan during the bankruptcy process, rather than a commitment to operate indefinitely: Character.AI says it will wind down the platform if no buyer emerges who is willing to continue operating it.[3] For users and teams that rely on the service, the key practical point is to distinguish current access from the outcome of the sale.[2][3]

Character.AI says it has faced significant legal, regulatory and operational headwinds over the past year.[2] The Verge reported that the company has faced lawsuits and scrutiny over chatbot safety.[4] TNW reported that Character.AI settled five lawsuits involving teen mental-health crises and suicides in January, and that families and U.S. states have brought further legal claims.[5] Character Technologies listed estimated assets and liabilities of between $50 million and $100 million in its court filing.[3] Those figures and claims offer context for the filing, but the evidence does not establish that they determine the sale price or outcome.[3][4]