Character.AI files for bankruptcy

<figure> <img alt="" data-caption="" data-portal-copyright="Image: The Verge" data-has-syndication-rights="1" src="https://platform.theverge.com/wp-content/uploads/sites/2/2026/10/STK278_character_ai_B.jpg?quality=90&#038;strip=all&#038;crop=0,0,100,100" /> <figcaption> </figcaption> </figure> <p class="wp-block-paragraph">Character.AI, one of the first breakout startups of the generative AI boom, has filed for bankruptcy and is selling some of its assets to Disney. The company, which builds various online bots for users to chat or roleplay with, has faced mounting scrutiny and <a href="https://www.theverge.com/news/858102/characterai-google-teen-suicide-settlement">lawsuits</a> over the <a href="https://www.theverge.com/report/841610/ai-chatbot-suicide-safety-failure">safety</a> of its <a href="https://www.theverge.com/ai-artificial-intelligence/1009463/character-ai-chats-encouraging-self-harm-detailed-in-unredacted-kentucky-lawsuit">chatbots</a>, but has continued <a href="https://www.theverge.com/ai-artificial-intelligence/951461/character-ai-is-adding-new-tools-for-chatbot-creators">releasing</a> updates and products in recent months.</p> <p class="wp-block-paragraph">In a <a href="https://www.businesswire.com/news/home/20261012656385/en/Character.ai-Initiates-Voluntary-Chapter-11-Proceeding-to-Facilitate-Value-Maximizing-Sale-Process">press release</a> and <a href="https://blog.character.ai/an-update-on-character-ai/">blog post</a> published Monday, Character said it had filed for Chapter 11 bankruptcy protection in the US to facilitate the sale of the company and its assets. "Over the past year, we've taken meaningful steps to sustain and improve our business amid signific …</p> <p><a href="https://www.theverge.com/ai-artificial-intelligence/1009802/character-ai-files-for-bankruptcy-disney">Read the full story at The Verge.</a></p>