Key takeaways:
- Character.AI filed for Chapter 11 bankruptcy in the United States on Monday.
- Disney agreed to make a $20 million baseline bid for certain company assets.
- Character.AI plans to continue platform operations while the court-supervised sale proceeds.
Character.AI filed for Chapter 11 bankruptcy in the United States on Monday and agreed to sell certain assets to Walt Disney Co. for $20 million as it seeks to maximize value through a court-supervised sale.
Character.AI seeks court approval for Disney deal
Character Technologies, the U.S.-based company that owns the generative artificial intelligence platform Character.AI, has started a formal process to sell assets, including a license for certain intellectual property, according to the company.
The proposed deal names Disney as the lead bidder, also known as a stalking horse bidder. Under the arrangement, Disney’s $20 million offer would establish a baseline price, allowing other interested parties to submit competing bids.
Character.AI is seeking court approval for the auction rules. The company expects the sale process to conclude by late November or early December 2026, according to its announcement.
The agreement does not guarantee that Disney will acquire the assets. Other bidders may offer higher prices, and the final outcome will depend on the court-supervised process.
Company reports up to $100 million in assets and liabilities
A court filing in the Character.AI bankruptcy lists Character Technologies’ estimated assets and liabilities between $50 million and $100 million. The filing provides a broad estimate of the company’s financial position as it pursues the bankruptcy process.
Colin Adams, CEO of Character.AI, said the board reviewed available alternatives before deciding to pursue the court-supervised sale.
“After a comprehensive review of the available alternatives, the board determined that this court-supervised sale process provides the company with the best opportunity to maximize value for all stakeholders,” Adams said.
Chapter 11 bankruptcy allows a company to seek court protection while restructuring its affairs or pursuing a sale. In the Character.AI bankruptcy, the company plans to use the process to sell selected assets while keeping its platform operational.
The proposed transaction centers on certain assets and intellectual property rights. The announcement does not establish that Disney will acquire the entire company or take over the Character.AI platform.
Character.AI plans to continue platform operations
Character.AI said it intends to continue operating its business, including its online platform, with minimal service disruptions throughout the sale process.
The company also outlined a possible alternative if the proceedings fail to produce a buyer willing to continue operating the platform. In that case, it said the business would be wound down.
The planned sale leaves the platform’s longer-term ownership and operating arrangements dependent on the outcome of the bidding process. Until the proceedings conclude, Character.AI intends to maintain its services while pursuing the court-supervised transaction.
The company expects the process to finish by late November or early December, although the timing and final terms remain subject to the proceedings.
The Character.AI bankruptcy filing marks a significant step in determining the future of Character.AI, while the proposed $20 million offer gives Disney an initial position in the asset sale.
