Character.AI Files for Bankruptcy and Sells Assets to Disney

Character Technologies, the owner of the Character.AI platform, filed for Chapter 11 bankruptcy in the United States on October 12, 2026. The company reported estimated assets and liabilities between $50 million and $100 million in its court filings.

As part of the filing, the company entered an agreement to sell specific assets, including intellectual property licenses, to The Walt Disney Company for $20 million. Character Technologies is seeking court approval to designate Disney as the stalking horse bidder, a move that sets a baseline price for any other competing bidders.

CEO Colin Adams stated that the board determined a court-supervised sale process provides the best opportunity to maximize value for all stakeholders. The company intends to keep the Character.AI platform operational with minimal disruption while the sale process proceeds. The transaction is expected to conclude by late November or early December 2026, though the service will be wound down if no buyer is found to continue operations.