Character.AI filed for Chapter 11 bankruptcy in Wilmington, Delaware on October 12 to sell its assets under court supervision, with the platform set to be wound down if no buyer keeps it running. Disney Worldwide Services is the opening bidder, offering $20 million for a non-exclusive, perpetual license to some of the startup’s intellectual property, weeks after hiring its former CEO as Disney’s first-ever chief technology officer. The company, which valued itself at $50 to $100 million for both assets and liabilities, was losing approximately $8 to $9 million per month and struggled to raise new capital, one year after settling multiple lawsuits filed by families of minors who died by suicide after becoming emotionally attached to the app’s characters. Following the bankruptcy announcement, Character.AI directed users toward mental health resources, tacitly acknowledging that some users viewed their AI companions as genuine emotional anchors.
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