Character.AI files for bankruptcy as Disney makes $20M opening bid

Character.AI, the startup that lets people create and chat with AI personas, has filed for Chapter 11 bankruptcy to run a court-supervised sale of its business. Disney has agreed to pay $20 million for a perpetual, nonexclusive license to selected intellectual property and certain claims—an opening offer that other bidders can beat, not a purchase of the whole platform. The company says the service will stay online during the process, but could be wound down if no buyer offers to keep it running. The filing follows costly operations and legal and regulatory pressure over how its chatbots interacted with younger users, showing how quickly a prominent consumer AI product can end up searching for a buyer.