AI news · Character.AI · deals
Character.AI files for bankruptcy with Disney as first bidder
The chatbot company is selling itself through a court process, and Disney has put in a $20 million opening bid for some of its assets.
Character.AI, the app where people chat with AI characters, filed for Chapter 11 bankruptcy in the United States on Monday 12 October 2026. Chapter 11 lets a company keep running while a court oversees a sale or restructuring.
Walt Disney has agreed to pay $20 million for some of its assets, including a licence to certain intellectual property, Reuters reports. Character.AI is asking the court to make Disney the stalking horse bidder, whose offer would set the floor while other buyers bid higher at auction. A court filing puts the company’s estimated assets and its liabilities each between $50 million and $100 million.
The company blames “significant legal, regulatory, and operational headwinds” over the past year. Character.AI aims to close the sale in late November or early December 2026.
The app stays online for now, and subscriptions and billing are unchanged. Character.AI says the platform closes if the auction finds no buyer willing to run it.
One of the best-known consumer chatbot brands now depends on a court auction to keep its app alive.
Sources
- Character.AI: An update on Character.ai. Checked
- Reuters via CNA: Character.AI files for bankruptcy, agrees to sell some assets for $20 million. Checked
Alexandre S.
Alexandre S. is a creative ad strategist and copywriter with ten years' experience in digital marketing across multiple channels.