Character.AI Files for Bankruptcy, Agrees to Sell Some Assets to Disney for $20 Million

According to Reuters on October 12, generative AI character dialogue platform Character.AI said on Monday that it has filed for Chapter 11 bankruptcy protection in the United States and agreed to sell some assets to Walt Disney for $20 million. The company has initiated a court-supervised asset sale process, including the licensing of certain intellectual property, and is seeking court approval of auction rules designating Disney as the lead bidder. Disney's bid will serve as the baseline offer, with other bidders allowed to submit higher bids. The company expects the sale process to be completed in late November or early December 2026 and intends to continue operations, including the Character.AI platform, during the process. Character.AI CEO Colin Adams stated that the board, after a comprehensive evaluation of available options, determined that this court-supervised sale process is most conducive to maximizing value for all stakeholders. According to court documents, the platform's owner, U.S. company Character Technologies, lists estimated assets and liabilities of between $50 million and $100 million.