Character.AI Files for Bankruptcy as Disney Bids $20M for Assets
The chatbot company will keep running during a court-supervised sale, which it expects to finish by early December.
October 13, 2026 - 7:54 am
Character.AI, owned by Character Technologies, has filed for Chapter 11 bankruptcy in the US and lined up Disney as the first bidder for some of its assets.
Key Points:
- Disney will pay $20 million for a non-exclusive, permanent license to some of Character.AI’s intellectual property and certain legal claims.
- The sale is expected to close in late November or early December.
- Character.AI plans to keep its app and website running with minimal disruption.
"Over the past year, Character.AI has taken meaningful steps to sustain and improve its business in the face of significant legal, regulatory, and operational headwinds," said Colin Adams, Character.AI’s chief executive.
Recent Developments:
- In January, Character.AI settled five lawsuits over teen mental health crises and suicides.
- Since then, it has faced more legal claims from families and US states.
- In September, Disney hired Karandeep Anand, then Character.AI’s boss, as its first group-wide technology chief.
Character Technologies listed estimated assets and liabilities of between $50 million and $100 million in its court filing.
By Cristian Dina, CRO at The Next Web