The Verge AI, TechCrunch AI · 6 sourcesThe Verge AI · 6 sources · 6 reports · Character.AI filed for bankruptcy protection; Disney plans to acquire some assets for $20 million
On October 13, 2026, the interactive chatbot platform Character.AI filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware to facilitate the sale of the company and its assets. Court filings show the company's assets and liabilities are each between $50 million and $100 million. Disney has agreed to act as a stalking horse bidder, acquiring certain undisclosed assets for $20 million and obtaining a non-exclusive perpetual intellectual property license, while providing transition support through former employees it has hired. CEO Colin Adams said the financial difficulties stem from significant legal, regulatory, and operational headwinds, and the sale process is expected to complete by late November or early December, but no buyer has bid yet, and if no one makes a bid, the platform will be shut down. The company said services remain operational and subscriptions remain valid until the transaction closes.