Artificial intelligence startup Character.ai said on Monday it had initiated voluntary Chapter 11 bankruptcy proceedings in the U.S. and agreed to sell some of its assets to Walt Disney for $20 million.
Here are some details about the bankruptcy and sale proceedings:
Character.ai said it has begun the formal process to sell assets, including a license of certain intellectual property, through Chapter 11 and is seeking court approval for auction rules that would designate Disney as the lead, or stalking horse, bidder.
Under this process, Disney's bid would set a baseline offer while allowing competing bidders to submit higher bids, and the company expects the sale process to conclude by late November or early December 2026.
"After a comprehensive review of the available alternatives, the board determined that this court-supervised sale process provides the company with the best opportunity to maximize value for all stakeholders," said Colin Adams, CEO of Character.ai.
Character Technologies, the U.S.-based owner of the generative AI platform, listed estimated assets and liabilities between $50 million and $100 million, according to a court filing.
The company said it intends to continue operating its business, including the Character.ai platform, with minimal service disruptions during the sale process. If the process fails to produce a buyer willing to continue operating the platform, it will be wound down.