DECRYPT · 2026-10-13 21:16 UTC

Character.AI Files for Bankruptcy as Disney Bids $20 Million—And Users Get Grief Resources

Character.AI filed for voluntary Chapter 11 bankruptcy in Delaware on October 12, seeking a court-supervised sale of assets with plans to wind down if no buyer continues operations. Disney is the opening bidder offering $20 million for a non-exclusive perpetual license to intellectual property and transition services, after hiring Character.AI's CEO as Disney's first CTO. The company directed users to mental health resources two weeks after launching new chat models and a $4.99 subscription, following lawsuits over a minor's death and FTC scrutiny.

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