October 13, 2026
Character.AI files for bankruptcy as Disney bids $20M for part of its IP
Character.AI filed for bankruptcy on Oct 12 in a Delaware court. Disney is offering $20 million for a non-exclusive license to part of its IP, and the bid could be outbid at auction.
Disney is offering a license to the IP and the company's requirements; the chat service itself is not part of the offer. If the sale does not keep the platform, it will be shut down. Until the deal closes, the company promises to operate "with minimal disruption".
In 2025, Disney demanded that the service remove bots featuring Disney characters. Now Disney is buying part of the IP from the same company.
Assets and timing. Estimated assets: $50 million to $100 million. The company faced lawsuits over chatbot safety, and the bankruptcy petition was signed by CEO Colin Adams.
The sale is expected to close in late November or early December 2026.