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Character.ai files for Chapter 11 bankruptcy protection, citing the cost of developing its AI entertainment platform and potential liabilities from litigation and regulatory engagement. The company has faced chatbot-safety lawsuits, including a January suit by Kentucky, and agreed to a $20 million Disney bid to license some intellectual property. Character.ai expects to keep its platform running during the sale process, though it says the service could ultimately be wound down.
Character.AI files for Chapter 11 bankruptcy, while Disney offers $20 million. The chatbot has been the subject of lawsuits and controversy related to its alleged impact on teenage users and its impersonation of copyrighted characters from movies and other media.
Character.AI says it filed for Chapter 11 bankruptcy protection in the United States on Monday and agreed to sell some of its assets to Walt Disney for $20 million. It plans to keep operating its business while it completes the agreed asset sale.