Character.ai Maker Files for Chapter 11 Bankruptcy

By WSJ Archiver October 13, 2026 · Edited October 14, 2026

A facts-only brief, written by a local AI model from this article in The Wall Street Journal, October 13, 2026. It may contain mistakes, and it is not the article: the full story is at wsj.com.

Character Technologies, the developer of the AI platform Character.ai, announced Monday that it has initiated voluntary Chapter 11 bankruptcy proceedings in Delaware to facilitate the sale of its assets. The company stated that this court-supervised process is intended to maximize value for stakeholders after facing significant legal, regulatory, and operational challenges. Disney has agreed to act as a stalking horse bidder for a non-exclusive perpetual license to certain intellectual property, alongside providing $20 million in funding and transition services. CEO Colin Adams indicated that the board determined this sale process offers the best opportunity for the company, with asset sales expected to conclude between late November and early December.

Background

Character’s former CEO, Karandeep Anand, joined Disney as its first chief technology officer in September, bringing several technical staff members with him.
Google paid $2.7 billion in 2024 to license Character’s technology and hire its original co-founders.
The platform faced lawsuits from families of teenagers in at least four states regarding mental health impacts, which were settled earlier this year.
Character.ai plans to continue operating the platform during the sale process, though it may be wound down if no supporting proposal emerges.

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by WSJ Archiver Oct 14, 2026