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As of Oct 14, New York Attorney General Letitia James and 39 other bipartisan attorneys general filed a notice of interest in Character.AI's Chapter 11 case, warning that any sale or transfer of its assets, including the planned sale of some assets to Disney, raises regulatory issues because of the sensitive conversations users have with its chatbots and the large number of minors who use them, per The Verge.
- Reported by TechCrunch
Disney agrees to offer jobs to most of Character.AI's workforce in its bankruptcy bid, per TechCrunch
Not confirmed by the company — reported on Oct 18, 2026 (source: techcrunch.com).
A court filing spotted by Bloomberg shows that Disney, the stalking-horse bidder in Character.AI's Chapter 11 sale, agreed to make employment offers to at least 60 Character.AI employees, the majority of the workforce, with an estimated $60 million in annual compensation, and that the vast majority of those offered jobs accepted. Because it is a stalking-horse bid, another company can still come forward with a higher offer. The filing says Character.AI, despite its large and engaged user base, was hobbled by high costs and potential litigation-related liabilities and regulatory engagement. Former Character.AI CEO Karandeep Anand recently became Disney's first CTO, per TechCrunch.
Source: TechCrunch - Reported by The Verge
40 state attorneys general move to protect Character.AI users' chat data in its bankruptcy sale and reveal a multi-state probe, per The Verge
Not confirmed by the company — reported on Oct 14, 2026 (source: theverge.com).
New York Attorney General Letitia James and 39 other bipartisan attorneys general filed a notice of interest in Character.AI's Chapter 11 case, warning that any sale or transfer of its assets, including the planned sale of some assets to Disney, raises regulatory issues because of the sensitive conversations users have with its chatbots and the large number of minors who use them. The filing reveals that several states opened a consumer-protection and privacy investigation in 2024; James's office said it uncovered chatbots posing as licensed professionals, exposure to sexual and violent content, weak age checks, misleading safety claims and potential privacy-law violations. The states want the judge to require any buyer to adopt age assurance, limits on minors' use, crisis safeguards and a way for users to delete their data.
Source: The Verge - Official
Character.AI files for Chapter 11 bankruptcy, with Disney as $20 million stalking-horse bidder for some of its assets
Character.AI published this on Oct 13, 2026 (source: blog.character.ai).
Character.AI says it has filed a voluntary Chapter 11 case in the U.S. Bankruptcy Court for the District of Delaware to run a court-supervised sale of all or substantially all of its assets. Disney Worldwide Services agreed before the filing to act as stalking-horse bidder, paying $20 million for a non-exclusive perpetual license to certain Character.AI intellectual property and claims, plus transition services using former Character.AI employees it has hired; higher offers can still win. The platform keeps running during the sale, expected to finish in late November or early December, but Character.AI says it will be wound down if no workable bid emerges. The filing lists assets and liabilities of $50 million to $100 million, per TechCrunch.
Source: Character.AI
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