Character.AI Files Chapter 11, Disney Named Stalking-Horse Bidder

Character.AI filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware, the company said, adding that it hopes the process will facilitate a value-maximizing sale of all or substantially all of its assets. The Character.AI platform will continue to operate during the bankruptcy, according to deadline.com.

Disney agreed to pay $20 million for a non-exclusive perpetual license of select intellectual property and company claims from Character.AI. Disney is classified as the stalking-horse bidder for the IP, and its bid is subject to higher or better offers.

Character.AI CEO Colin Adams said the board determined that the court-supervised sale process provides the best opportunity to maximize value for stakeholders. The company said it aims to conclude the sale process by late November or early December.

Disney's AI Talent Moves

Disney appointed former Character.AI chief Karandeep Anand as its first CTO in September 2026. Anand reports directly to Disney CEO Josh D'Amaro, who succeeded Bob Iger as CEO earlier in 2026.

During the latter part of Iger's tenure, Disney made a deal with OpenAI to license characters for use on Sora and invest $1 billion in OpenAI, which was scuttled two months later after OpenAI shut down Sora.