Character.ai files for bankruptcy, names Disney as lead bidder for its assets
Character.ai filed for Chapter 11 bankruptcy protection on Monday, October 12, 2026. The Menlo Park chatbot startup, once valued at $1 billion, said it has lined up Disney as the lead bidder for its assets: a $20 million deal for a non-exclusive, perpetual license to some of its intellectual property. The court-supervised sale is expected to wrap by late November or early December, per Reuters. Court documents, meanwhile, tell the story of a brutal comedown. Character Technologies, the company’s legal name, listed estimated assets and liabilities each between $50 million and $100 million, according to the court documents. That’s a rounding error next to where it once stood: a $150 million funding round in March 2023 valued the company at about $1 billion, and Google’s 2024 licensing deal (which also brought the founders back to Google) reportedly translated to a valuation around $2.5 billion. ...