Character.AI files for Chapter 11 with Disney as initial IP-license bidder

Character Technologies Inc., which operates Character.AI, filed for Chapter 11 in Delaware to pursue a court-supervised sale of all or substantially all of its assets. Disney Worldwide Services is the proposed initial bidder for a narrower transaction: a $20 million license package, not a completed acquisition of the Character.AI platform.

A stalking-horse bid establishes a baseline against which other offers can compete. Character.AI said it asked the court to approve bidding procedures and designate Disney as the stalking-horse purchaser for certain assets. The process can produce higher or otherwise better offers, and neither Disney’s designation nor an ultimate buyer has been confirmed.

The proposed agreement calls for $20 million plus transition services in exchange for a non-exclusive, perpetual license to certain Character.AI intellectual property and certain company claims. It does not give Disney exclusive ownership of all Character.AI technology. The available materials do not identify the exact intellectual property or claims covered, and the underlying agreement was not available for review.

The Disney proposal is one part of the wider Chapter 11 process. Character.AI is seeking a buyer or buyers for all or substantially all of its assets, while Disney’s bid sets an initial price only for specified licensed rights and claims.

Character.AI said the platform remains available during the sale process and that paid subscriptions and billing are unchanged for now. The company said it would wind down the platform if the process does not produce a purchase that provides for continued operation. The available materials do not establish whether user data or chat histories are included in the broader sale package or Disney’s proposed license.

Character.AI expects the sale process and any resulting transaction closings in late November or early December 2026. That timetable is the company’s expectation, not a completed or court-approved milestone.