Character.AI's bankruptcy and Disney asset sale

Character.AI filed for bankruptcy as a deliberate strategic move, not an unplanned collapse. Disney agreed to offer jobs to at least 60 Character.AI employees, described as the majority of the company, at an estimated $60 million in combined annual pay, and agreed to purchase some assets for $20 million. The deal is structured as a stalking-horse bid, meaning another buyer could still outbid Disney at the bankruptcy auction. Character Technologies, the U.S.-based entity, listed estimated assets and liabilities of $50 million to $100 million in court filings. The sale of all assets is expected to close by late November or early December 2026; the platform's services will continue during the transition but would be shut down if no buyer is found. The bankruptcy's stated goal was to reach a consensual resolution with personal injury claimants and a group of states investigating the company, while maximizing value for shareholders. The deal structure leaves legal liabilities with the remaining Character.AI entity rather than transferring them to Disney.