Character.AI Files Bankruptcy, Sells Assets to Disney

Character.AI, the AI chatbot platform founded in 2021 by former Google engineers, has filed for Chapter 11 bankruptcy after five years marked by rapid growth and mounting legal troubles. The company, which reported assets and liabilities between $50 million and $100 million, has agreed to sell some assets to Disney for $20 million. CEO Colin Adams said operations will continue during the sale process, expected to close by early December, but warned the platform could be wound down if no viable bid emerges. The startup raised over $193 million in funding and reached 20 million monthly active users before financial pressures proved insurmountable.