Character.AI enters Chapter 11 as Disney bids $20 million for IP license
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Character Technologies, the company behind chatbot platform Character.AI, filed for Chapter 11 bankruptcy protection on Oct. 12 with the U.S. Bankruptcy Court for the District of Delaware. Entertainment giant Disney opened the bidding in the resulting auction with $20 million for a license covering select company assets. Under the agreement, reached before the filing, a Disney affiliate, Disney Worldwide Services, would receive a perpetual, non-exclusive license to selected Character.AI intellectual property, plus specific claims held by the company. Former Character.AI employees whom Disney has hired would supply transition services. That arrangement keeps the platform online for a temporary window during the sale. Rival buyers can still outbid Disney. Bankruptcy rules give Disney the stalking horse position, which sets a floor price that competing bids can top under section 363 of the Bankruptcy Code. Karandeep Anand, Character.AI's chief executive from 2025, left the startup in September 2026 to become Disney's chief technology officer. Colin Adams now holds the CEO post at Character.AI. Adams tied the filing to a year of legal and regulatory strain, plus problems on the operational side. "After a comprehensive review of the available alternatives," Adams said, the board settled on the court-run sale as its best route to recover the most for stakeholders. Court papers...
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