Character.AI Files Chapter 11; Disney Bids $20M for IP License

Character Technologies, parent of the companion-chat site Character.ai, filed for Chapter 11 in Delaware on October 12, 2026, with Disney Worldwide Services already lined up as stalking-horse bidder.

Disney's price is $20 million. As Reuters reported and the company confirmed in its own announcement, that figure buys "a non-exclusive perpetual license of certain Company intellectual property and claims, in exchange for $20 million and Disney's provision of transition services." Those services are being performed by former Character.AI employees Disney has since hired.

The parent listed estimated assets and liabilities each in the $50 million to $100 million range. The company says the filing is meant "to facilitate a value-maximizing sale of all or substantially all of its assets."

Character.ai intends to keep the platform running during the auction. If no bidder emerges willing to continue operating it, the service will be wound down. Closing is expected in late November or early December 2026.

The slide is steep. Character.ai was once valued at $1 billion, and in summer 2024 Google paid about $2.7 billion to license its technology and bring co-founders Noam Shazeer and Daniel De Freitas back to DeepMind along with roughly 30 researchers. After that deal, Character.AI gave up developing its own frontier models. The $20 million stalking-horse figure is what the standalone business carries now, and the license on offer isn't even exclusive. It joins a steady run of AI-assistant stories in our tracker over the last ninety days.