Character.ai files for bankruptcy and will shut down if no buyer is found
The chatbot app has filed for bankruptcy. Disney will pay $20 million for some assets, but no one has yet offered to buy the rest, so the app could close.
Character.ai lets people create AI characters and chat with them. It has filed for Chapter 11 bankruptcy, a US process. The Verge reports the filing is meant to help sell Character.ai and its assets.
TechCrunch reports that Disney has agreed to pay $20 million for some of those assets. Disney would also get a permanent license to the technology that isn't exclusive to Disney. The Verge says Disney's offer sets the starting bar for any rival bids. Disney recently hired Character.ai's former CEO, Karandeep Anand.
Character.ai CEO Colin Adams says the app will keep running during the sale, which is expected to finish in late November or early December. He also says there is no bid or buyer for the rest yet. If none appears, he wrote, "the platform will be wound down."
Character.ai points to legal, regulatory and operating problems. TechCrunch notes one lawsuit came from the mother of a 14-year-old Florida boy who died by suicide.
In my opinion, anyone who uses Character.ai should treat it as something that could vanish after early December. Nothing changes today, since the app and paid subscriptions still work. But starting a new subscription is a risk, and any chats or characters you care about may not survive a shutdown.
The facts
- Character.ai filed for Chapter 11 bankruptcy in the US to facilitate a sale of itself and its assets.
- Disney agreed to pay $20 million for some Character.ai assets, plus a non-exclusive perpetual license for its technology.
- CEO Colin Adams said there is not yet a bid or buyer, and that the platform will be wound down if no bid emerges.
- The sale is expected to close in late November or early December, and Character.ai's service and paid subscriptions keep running meanwhile.
- In its bankruptcy filing, Character.ai listed estimated liabilities between $50 million and $100 million.
- Disney recently hired former Character.ai CEO Karandeep Anand as chief technology officer.
- Google struck a $2.7 billion deal in August 2024 to license Character.ai's models, and co-founders Noam Shazeer and Daniel De Freitas returned to Google.
- Character.ai was sued after the suicide of a 14-year-old Florida boy, settled some lawsuits, added safety features and banned minors.
Sources
- The Decoder: Character.ai will shut down if no buyer emerges, capping a fall from $2.7 billion Google deal to bankruptcy
- TechCrunch AI: Just 5 years in, interactive chatbot platform Character.AI files for bankruptcy
- Hacker News (AI, 100+ points): Character.ai Files for Bankruptcy
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