Character.AI Files for Bankruptcy

Character.aiCharacter.aiAmerican neural language model chatbot service filed for Chapter 11 bankruptcy protection to pursue a court-supervised sale of nearly all its assets. DisneyThe Walt Disney CompanyAmerican multinational mass media company agreed to serve as the initial bidder, offering $20 million for a non-exclusive, perpetual license to some intellectual property and transition support. Character.ai lets users create or choose AI characters for conversation and roleplay. Families had sued over claims its chatbots contributed to teen suicides or self-harm, and the company and GoogleGoogleAmerican multinational technology company, a subsidiary of Alphabet Inc. settled several cases earlier in 2026. Character.ai blamed high development costs, litigation risk and regulatory work for its cash squeeze. Its filing listed assets and liabilities as high as $100 million. The service will continue during the sale, but could shut down without a buyer.