Character.AI files for bankruptcy in the US and will sell assets to Disney for $20 million

Character.AI is a virtual character chatbot platform powered by large language models. It hosts millions of AI characters created by users or the company, covering anime and game figures, historical icons, original characters, and story heroes. According to Reuters, Character.AI has filed for bankruptcy protection in the US and agreed to sell some assets to Walt Disney for $20 million. The company has started the asset sale process under Chapter 11, naming Disney as the lead bidder. Disney's offer will serve as the starting bid, and other bidders can still make higher offers. Character.AI expects the sale to close in late November or early December 2026. The company will keep running its current business during the sale to minimize service disruptions. If no buyer willing to operate the platform is found, the company will gradually wind down its operations.