Character.AI files for bankruptcy as Disney bids $20M for some assets

What happened

Character.AI has filed for Chapter 11 bankruptcy in the US and lined up Disney as the first bidder for some of its assets, the company said on Monday. The AI chatbot platform, owned by Character Technologies, filed in a federal court in Delaware.

October 13, 2026 - 7:54 am Character.AI has filed for Chapter 11 bankruptcy in the US and lined up Disney as the first bidder for some of its assets, the company said on Monday. It plans to sell all or most of its assets through the court.

Business Character.AI files for bankruptcy as Disney bids $20M for some assets The chatbot company will keep running during a court-supervised sale, which it expects to finish by early December. Founded in 2021, the platform lets users chat with AI characters.

It will also lend back former Character.AI staff it has hired to help keep the platform running safely for a while. The Disney offer acts as a floor, and rival buyers can still bid more.

Character.AI has asked the court to approve those bidding rules, and it expects the sale to close in late November or early December. In January, the company settled five lawsuits over teen mental health crises and suicides.