Character.AI has initiated a voluntary Chapter 11 bankruptcy process and agreed to sell some of its assets to Disney for $20 million. The company says its platform will remain online while the proposed transaction moves through a court-supervised sale process.
Character.AI expects the court sale to finish by December
Character.AI said its board chose the bankruptcy process after reviewing its options amid legal, regulatory and operational pressures. The company says it expects the court-supervised sale to be completed by the end of November or possibly early December 2026.
Reuters reported that the proposed transaction involves selling some of Character.AI’s assets to Walt Disney for $20 million. Character.AI has not announced an immediate shutdown.
Character.AI says accounts and subscriptions remain active
For users, the immediate situation is largely unchanged. Character.AI says the platform remains available, paid subscriptions remain active and billing is unchanged for now. The company also says its privacy and security practices have not changed during the bankruptcy process.
The company says the platform could be wound down if the sale process does not produce an actionable proposal. If the service changes in a way that affects paid features, Character.AI says it intends to notify subscribers in advance.
Disney is buying a path into interactive AI entertainment
The proposed deal would give Disney a direct foothold in a platform built around interactive entertainment, characters, stories and communities. Disney announced in September that Character.AI CEO Karandeep Anand would become its senior executive vice president and chief technology officer, effective October 2, 2026. Disney also said several members of Character.AI’s technical team were expected to join him.
Character.AI’s own announcement says the company will continue operating while it seeks the best outcome for its platform and community.
Users can preserve their Character.AI data now
- Sign in to Character.AI through the official website or mobile app.
- Review your account, subscription and privacy settings before the sale process is completed.
- Use the platform’s available account tools to delete your account or export your data if you want an independent copy of your chats.
Character.AI says users can continue accessing the service during the sale, but its bankruptcy filing leaves the platform’s long-term ownership and policies subject to the court-supervised process.
References
Reuters. (2026, October 13). Character.AI files for bankruptcy, agrees to sell some assets to Disney for $20 million. Investing.com. https://www.investing.com/news/stock-market-news/characterai-files-for-bankruptcy-agrees-to-sell-some-assets-to-disney-for-20-million-4945401
Character.AI. (2026, October 12). An update on Character.ai. https://blog.character.ai/an-update-on-character-ai/
The Walt Disney Company. (2026, September 18). The Walt Disney Company names Karandeep Anand to newly created role of chief technology officer. https://thewaltdisneycompany.com/news/karandeep-anand-chief-technology-officer/