Character.AI files for bankruptcy, agrees to sell some assets for $20 million

Oct 12 — Character.AI said on Monday it had filed for Chapter 11 ​bankruptcy in the US and agreed to sell some of its assets to Walt Disney for $20 ‌million.

Here are some details about the bankruptcy and sale proceedings:

• Character.AI said ⁠it has begun the ​formal process to sell ⁠assets, including a license of certain intellectual property, through ‌Chapter 11 and ‌is seeking court approval for auction rules that ⁠would designate Disney as ⁠the lead, or stalking horse, bidder.

• Under this process, Disney's bid would set a baseline offer while allowing competing bidders to submit higher bids, and the company expects the sale process to conclude by ‌late November or early December 2026.

• "After ​a comprehensive review of the available alternatives, the board determined that this court-supervised sale process provides the company with the best opportunity to maximize value for all stakeholders," said Colin Adams, CEO of Character.AI.

• Character Technologies, the US-based owner of the generative ​AI platform, listed estimated assets and liabilities between $50 million ‌and $100 million, according ‌to ⁠a court filing.

• The company said it intends to continue operating its business, including the Character.AI platform, with minimal service disruptions during the sale process. If the process ‌fails to produce ​a buyer willing to continue operating ‌the platform, it will ⁠be ​wound down.

(Reporting by Rhea Rose Abraham in Bengaluru; Editing by ​Rashmi Aich)

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