Character.ai Initiates Voluntary Chapter 11 Proceeding to Facilitate Value-Maximizing Sale Process
Character.ai filed for Chapter 11 bankruptcy to sell its assets, with Disney as the stalking horse bidder for a $20 million IP license.Summary
Character Technologies Inc., known as Character.ai, announced it has commenced a voluntary Chapter 11 bankruptcy case in the U.S. Bankruptcy Court for the District of Delaware to facilitate a value-maximizing sale of all or substantially all of its assets. The company intends to continue operating its AI entertainment platform throughout the sale process.
Prior to the filing, Character.ai entered into an agreement with Disney Worldwide Services, Inc., which will serve as the stalking horse bidder for a non-exclusive perpetual license of certain company intellectual property and claims for $20 million, along with providing transition services using former employees hired by Disney. The transaction is subject to higher or better offers under section 363 of the Bankruptcy Code. Character.ai has filed a motion for approval of bidding procedures and anticipates the sale process to complete in late November or early December 2026.
CEO Colin Adams stated that the board determined this court-supervised process provides the best opportunity to maximize value for stakeholders, emphasizing the priority of maintaining a safe user experience. The company has filed first-day motions to continue operations with minimal disruptions, including paying wages and honoring commitments to users, vendors, and partners. If no purchase ensures the platform's continuation, Character.ai will be wound down. Legal and financial advisors have been engaged for the process.
(Source：Businesswire)