Character.AI has filed for Chapter 11 bankruptcy in the United States. The company reported estimated liabilities ranging from $50 million to $100 million. It plans to maintain its current services and paid subscriptions while navigating the sale process, which is expected to conclude by late November or early December.
Disney has emerged as the lead bidder for certain assets of the startup, offering $20 million. The deal includes a nonexclusive license to unspecified intellectual property and transition support from former Character.AI employees hired by Disney. If no suitable bid is found, the company warned that the platform will be shut down.
The acquisition follows Disney's recent hiring of former Character.AI CEO Karandeep Anand as its chief technology officer. Disney also expects to bring on a number of technical staff from the startup. This move follows a previous talent drain in 2024, when Google spent over $2 billion to hire key personnel, including co-founders Noam Shazeer and Daniel De Freitas.
