Character.AI Files for Bankruptcy as Disney Offers $20 Million for Chatbot Technology

1. 02:47
   The Verge · AI

   State attorneys general seek user data protections in Character.AI’s bankruptcy sale

   Forty bipartisan state attorneys general are seeking safeguards for consumer data in Character.AI’s bankruptcy proceeding after the company announced Tuesday it was filing for Chapter 11 and selling some assets to Disney. New York Attorney General Letitia James revealed a multi-state investigation opened in 2024 into consumer protection and privacy concerns. The states want any purchaser to implement age assurance, restrictions on minors’ chatbot interactions, crisis safeguards, and options for users to delete their data.

1. 02:23
   Ars Technica · AI

   Disney offers $20M for Character.AI’s scandal-plagued chatbot tech

   Disney has offered $20 million for Character.AI’s chatbot technology through Character Technologies’ bankruptcy sale process. Character.AI says the platform will remain accessible and subscriptions will continue to be charged, with the sale expected to conclude by the end of November or perhaps early December 2026. The company declined to comment on whether sensitive data might be sold; its privacy policy permits transferring identifying information, voice data, and chat logs during asset sales.

1. 23:27
   The Decoder

   Character.ai files for bankruptcy and will shut down if no buyer emerges

   Character.ai has filed for bankruptcy and is seeking a buyer, with a deal expected to close by early December 2026; without one, the service will shut down. The platform and subscriptions remain operational until then, and the company attributes its situation to lawsuits over harm to children, regulatory pressure, and operational problems. Disney is acquiring some assets for $20 million, including a perpetual, non-exclusive technology license, following Google's $2.7 billion deal in 2024.

2. 20:23
   TechCrunch · AIPicks

   Character.AI files for Chapter 11 bankruptcy five years after its founding

   Character.AI has filed for Chapter 11 bankruptcy following lawsuits and struggles to scale, reporting assets and liabilities between $50 million and $100 million. It agreed to sell some assets to Disney for $20 million, along with a non-exclusive perpetual technology license. CEO Colin Adams said operations would continue during the sale process, expected to close in late November or early December, but the platform would shut down if no suitable bid emerged to sustain it.

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