Character.ai Files for Bankruptcy as Disney Bids $20M for Its Tech
After fighting off lawsuits over safety and copyright infringement, Character.ai has filed for Chapter 11 bankruptcy. Its former adversary, Disney, is the opening bidder for its tech assets.
Chatbot platform Character.ai has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware. According to the company's announcement, the voluntary filing sets in motion a court-supervised sale of its intellectual property, with Disney stepping up as the initial bidder.
Disney submitted an opening offer of $20 million for a non-exclusive, perpetual license covering a portion of Character.ai's intellectual property. Other suitors can submit competing bids at an upcoming auction, which the company expects to conclude by November or December.
The bankruptcy follows mounting legal and regulatory battles. In 2024, the startup faced multiple lawsuits, including one alleging it contributed to a teenager's suicide and another citing exposure to obscene content. While Character.ai initially claimed bot responses were protected speech under the First Amendment, it subsequently restricted minors from open-ended chats. Legal trouble compounded in May 2026, when Pennsylvania authorities sued the platform after an unlicensed bot reportedly posed as a practicing psychiatrist.
The sale also marks an ironic turn in the company's relationship with its leading bidder. In September 2025, Disney issued a cease-and-desist demand over bots impersonating figures like Elsa, Moana, Spider-Man, and Darth Vader, forcing the platform to scrub those characters. A year later, Disney is using court proceedings to acquire the underlying interaction technology at a steep discount.
Source: habr
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