Business / Character AIthe 15th of October 2026, 11:00 UTC

Character.AI goes bankrupt, Disney bids $20M

Character.AI filed for Chapter 11 in Delaware on the 12th of October 2026. Disney opened the bidding at 20 million dollars, and the app keeps running while the company looks for a buyer.

Character Technologies' Character.AI

Character Technologies, the maker of the chatbot app Character.AI, filed for Chapter 11 bankruptcy on the 12th of October 2026. It wants a court run sale of the business, its blog post said that day.

Disney opened the bidding at 20 million dollars, Reuters reported on the 13th of October. The case is in the Delaware bankruptcy court.

Disney's 20 million dollars buys a shared licence to code and 9 patents

Disney is the stalking horse bidder, the first offer that rivals must beat. It gets a permanent licence that others can share, Reuters reported.

The licence covers code and 9 patents, PPC Land reported from the court papers. The app, user chats and user data stay with the company.

Below we break down the money in the court papers

The company loses about 8 million to 9 million dollars a month, Reuters reported, citing court papers. So Disney's bid covers about 2 to 2.5 months of losses, by our arithmetic.

Google is the largest unsecured creditor, owed 4,148,944 dollars, PPC Land reported from the creditor list. The filings do not say what the bill is for.

Rival bids must reach at least 21.7 million dollars, PPC Land reported. If Disney loses, it gets a 700,000 dollar break up fee.

Character.AI bankruptcy in numbers: Disney's opening bid 20 million dollars, lowest rival bid 21.7 million, break up fee 700,000 dollars, Google owed 4,148,944 dollars, supplier payment cap 2.5 million, monthly loss 8 to 9 million

Users keep the app and subscriptions for now

The app keeps running and paid subscriptions stay active, Character.AI's post said. Users can delete their accounts or export their data.

The privacy policy allows user data to be passed on in a sale, CBS News reported on the 13th of October. If no buyer keeps the app running, it will be shut down, the post said.

Bid dates still need the court, and Google licensed the models in 2024

Bids would be due on the 20th of November, with an auction on the 23rd, PPC Land reported. The court still has to approve these dates.

Google licensed the startup's models for 2.7 billion dollars in August 2024, TechCrunch reported.

Key facts

Chapter 11 filing on the 12th of October 2026, in Delaware.

Disney opens the bidding at 20 million dollars for a licence.

Google is owed 4,148,944 dollars, the largest unsecured claim.

The app keeps running during the sale.

Source: Character.AI blog: An Update on Character.AI