It was reported that the interactive AI chat platform Character.AI has filed for Chapter 11 bankruptcy protection, with company assets and liabilities both ranging between $50 million and $100 million. Character.AI has also agreed to sell certain assets to Disney for $20 million and grant it a non-exclusive, perpetual technology license; additionally, Disney will receive transition services from former Character.AI employees who joined the company last month.

The company stated that the bankruptcy sale process is expected to conclude by late November or early December, during which the platform will continue operating. However, no definitive asset bidders or buyers have emerged thus far; if an executable acquisition proposal cannot be secured, the platform will be shut down. Character.AI previously faced litigation over the suicide of a 14-year-old boy from Florida and underwent an investigation by Texas authorities regarding children’s privacy and safety compliance. Subsequently, the company settled part of the litigation, enhanced its safety features, and implemented a ban on underage users.