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Character.AI files for Chapter 11, agrees to sell some assets to Disney

TechCrunch reports the AI chatbot platform, founded in 2021, has filed for bankruptcy and agreed to sell some assets to Disney.

Updated Oct 14, 2026 · 16:34 UTC4 reports

The short version

  • Character.AI, an AI chatbot platform, has filed for Chapter 11 bankruptcy five years after its founding.[TechCrunch]
  • The company reported assets and liabilities between $50 million and $100 million in a court document.[TechCrunch]
  • It agreed to sell some assets to Disney for $20 million, plus a non-exclusive perpetual license for its technology.[TechCrunch]
  • CEO Colin Adams said the company will keep operating during a sale expected to close in late November or early December, which has not yet happened.[TechCrunch]

Key facts

  • Character.AI filed for Chapter 11 bankruptcy five years after its founding.[TechCrunch]
  • The company reported assets and liabilities between $50 million and $100 million in a court document.[TechCrunch]
  • Character.AI agreed to sell some assets to Disney for $20 million, plus a non-exclusive perpetual license for its technology.[TechCrunch]
  • Character.AI was founded in late 2021 by former Google engineers Noam Shazeer and Daniel De Freitas.[TechCrunch]
  • In August 2024, Google struck a $2.7 billion deal to license the startup's models.[TechCrunch]
  • Character.AI was sued after the suicide of a 14-year-old Florida boy whose mother said he became obsessed with a chatbot on the platform.[TechCrunch]
  • CEO Colin Adams said the company would continue operating during the sale process, which is expected to close in late November or early December.[TechCrunch]

What remains uncertain

  • The $50 million to $100 million asset and liability range comes from a court document as reported by TechCrunch and has not been independently confirmed in the provided reporting.[TechCrunch]
  • The Disney sale and its expected closing in late November or early December are company expectations, not completed transactions.[TechCrunch]

Sources

Outlet counts describe coverage, not independent confirmation. Reports may share a wire service or original source.