The Character.AI filed for bankruptcy protection under Chapter 11 in the United States on Monday (12), starting a process to sell all or substantially all of its assets. Disney entered into an initial agreement for US$ 20 million, but the amount does not represent the full acquisition of the artificial intelligence platform.
The proceeding is underway in the Bankruptcy Court for the District of Delaware and allows the company to keep operating while it seeks buyers. Character.AI intends to keep its services available, although it admits that the platform may be shut down if it does not find a proposal that guarantees its continuity.
The company attributed the decision to legal, regulatory and operational difficulties faced over the past year. According to court documents cited by Reuters, Character Technologies declared estimated assets and liabilities, each, between US$ 50 million and US$ 100 million.
What Disney gets for US$ 20 million and when Character.AI may close
The agreement involves Disney Worldwide Services, an affiliate of the entertainment group, which will act as stalking horse bidder. In this model, its bid sets an initial benchmark for the court-supervised sale, allowing other interested parties to submit higher offers or offers considered more advantageous.
The transaction provides for a perpetual and non-exclusive license over certain intellectual property rights of Character.AI, in addition to certain claims of the company. In return, Disney offers US$ 20 million and transition services provided by former employees of the platform who were hired by the group.
These services should help keep the operation running for a limited period and support the sale process. The agreement does not automatically transfer control of all of Character.AI to Disney, nor does it ensure that the platform will continue operating after the conclusion of the proceeding.
The company requested court authorization for the bidding rules and the conduct of the sale. The schedule presented provides for the conclusion of the process and the closing of any transactions between late November and early December 2026.
For users, access remains available. Character.AI said that paid subscriptions remain active and that billing will not change for now. The company also promised to give advance notice if changes to the service affect paid features.
Privacy and data security practices remain unchanged, according to the company, which keeps available the options to export conversations and delete accounts.
Continuity after the sale, however, will depend on the bids received. If no transaction allows the platform to keep operating, Character.AI will be shut down, according to the condition established in the official statement.
