Character Technologies Inc. announced on October 12 that it has voluntarily filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware. The company stated the filing is intended to facilitate a court-supervised sale of all or substantially all of its assets.

While the bankruptcy proceedings are underway, the platform remains running, active subscriptions continue, and billing practices remain unchanged for now. However, the company says it will wind down the platform if no sale provides for continued operations.

Current Access and User Data Options

For users currently relying on the platform, Character.ai outlined several immediate operational conditions and self-service tools:

  • Platform Availability: The service remains accessible, and paid subscriptions remain active under current billing arrangements. Character.ai stated it intends to provide advance notice if paid features change.
  • Data Export: Users who want to retrieve their information can export their data directly through the Character.ai mobile app or web interface.
  • Account Deletion: Users also retain the option to delete their accounts using existing settings across the app and website.
  • Data Protection: The company asserted that its privacy and security practices remain unchanged during the Chapter 11 proceedings.

The Disney Stalking Horse Bid and Sale Timeline

Prior to the bankruptcy filing, Character.ai entered into a stalking horse agreement with Disney Worldwide Services. Under the proposed terms, Disney agreed to pay $20 million for a non-exclusive perpetual license to certain intellectual property and specific company claims, alongside transition services provided by former Character.ai employees who have been hired by Disney.

The agreement with Disney does not represent an equity purchase, an acquisition of Character.ai as a going concern, or a commitment by Disney to keep the consumer platform online. Because it serves as a stalking horse bid, the proposal is subject to higher or better offers, court-approved bidding procedures, and formal bankruptcy court review.

Character.ai stated that it expects the court-supervised sale process to conclude in late November or early December 2026. If the proceedings fail to yield a transaction that provides for continued operations, the company confirmed that the platform will wind down. Character.ai has not announced a specific shutdown date.

To maintain near-term stability, the company filed customary first-day motions requesting court authorization to pay employee wages and benefits, honor user commitments, and satisfy post-filing vendor obligations, all subject to judicial approval. In the announcement, Character.ai CEO Colin Adams attributed the restructuring decision to a combination of legal, regulatory, and operational headwinds.