The Verge reported on 13 October that Character.AI has filed for Chapter 11 bankruptcy in the US. The startup makes chatbots that users can talk to or role-play with. The company announced the filing on Monday and said it wants to sell the business and its assets. According to The Verge, the filing puts its debts at an estimated $50 million to $100 million. Disney would be the lead bidder, which sets a floor for rival offers. The Verge said Disney would pay $20 million for certain assets and get a nonexclusive licence to some intellectual property.
Several details are still open. The Verge says the assets Disney would buy and the intellectual property in the licence have not been named. No other bidders have been reported. The Verge also said Disney recently hired former Character.AI CEO Karandeep Anand as its chief technology officer. Disney expects some of the startup's technical staff to join him. Character.AI said it expects the sale to finish by late November or early December. Until then it plans to keep its services running, paid subscriptions included. It also said it will wind the platform down if no suitable bid appears.
People who build on Character.AI, or pay for it, now have a stated risk. By the company's own account, the service could be sold or closed within weeks. Anyone relying on an AI vendor can check what happens to their use of it if that vendor is sold.