Character.AI files for Chapter 11 to sell itself, with a Disney affiliate's $20m bid for an IP licence as the opening offer, and 40 attorneys general ask the court to protect children in any sale
The chatbot company says its app stays up during a court-supervised sale. The states' notice warns that its voluntary limits on minors could be reversed by a new owner.
Character Technologies, the company behind the chatbot app Character.AI, filed a voluntary Chapter 11 petition on 12 October in the US Bankruptcy Court for the District of Delaware, according to the case site run on Stretto. The case number is 26-11603 (BLS). In a blog post, the company said it had started the process “to facilitate a court-supervised sale of the company”, and that “The Character.ai platform remains up and running”.
An affiliate of Disney is the stalking-horse bidder: its offer sets the floor for an auction, and higher bids can still win. Disney would pay $20m, Unite.AI and Futurism reported, both citing the company's announcement, which itself would not open. Unite.AI said the deal is for a non-exclusive perpetual licence to certain company intellectual property. Futurism reported that a court filing puts the company's liabilities at $50m to $100m, and Unite.AI that the sale is expected to close in late November or early December.
On 14 October a bipartisan coalition of attorneys general filed a legal notice in the case. Minnesota's attorney general puts the coalition at 40 attorneys general. They ask that privacy and safety protections for children and consumers be addressed in any sale, and reserve the right to challenge it. Minnesota's release says the company's recent limits on minors' access are voluntary, easily circumvented, and could be reversed by a future buyer.
Futurism reported that Google paid $2.7bn in 2024 in a deal that took the founders Noam Shazeer and Daniel De Freitas back to Google. The company has also faced lawsuits over harm to young users.
- Confirmed Character Technologies filed for Chapter 11 on 12 October 2026 in Delaware, case 26-11603 (BLS). Stretto, case site
- Reported A Disney affiliate is the stalking-horse bidder in a $20m agreement for a non-exclusive perpetual licence of certain company IP, Unite.AI reported, citing the company's announcement. Unite.AI
- Confirmed A bipartisan coalition of attorneys general, 40 according to Minnesota's attorney general, filed notice asking for child-safety and privacy protections in any sale. Minnesota Attorney General
- Claimed The company says the platform remains up and running during the sale process. Character.AI blog
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Catching up in the October 18, 2026 edition · front page