Disney makes $20m bid for Character.AI technology license
Disney’s $20 million offer covers a non-exclusive Character.AI IP license, not the whole company, and rival bidders can still top it.
By Hana Yoshida · Markets Reporter
3 min read
Disney’s Character.AI $20m bid is an opening offer for a license to selected intellectual property, not a completed purchase of the chatbot company. The distinction matters because other bidders can make higher offers and Character.AI’s consumer platform could still close if no buyer agrees to keep it operating.
Character Technologies, the company behind Character.AI, has filed for voluntary Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware. It said the court-supervised process is intended to sell all or substantially all of its assets, according to Deadline and Reuters.
What does Disney’s Character.AI bid cover?
Disney has offered $20 million for a non-exclusive, perpetual license to certain Character.AI intellectual property and related claims, the companies said. The public announcements do not identify the specific technology covered by the proposed license.
Disney is serving as the stalking-horse bidder, Reuters reported. In a bankruptcy sale, that means its bid establishes an initial offer that can be surpassed by a higher or better proposal before the court approves a transaction. Disney therefore has not bought Character.AI or secured exclusive rights to the technology.
Character.AI expects the sale process to finish in late November or early December 2026. Disney declined to comment on the proposed sale, Reuters said.
Will Character.AI stay online during bankruptcy?
Character.AI says its platform will remain available while the Chapter 11 case proceeds. But the company has said it could shut down if it does not find a buyer willing to continue the operation.
The company had roughly 12 million active users but was not profitable, Reuters reported from court filings. It was losing about $8 million to $9 million a month, while its estimated assets and liabilities were each listed between $50 million and $100 million.
What legal issues does Character.AI face?
Character.AI told the bankruptcy court it hopes to use the process to reach a global resolution of legal claims, Reuters reported. Those matters include investigations by U.S. states and international regulators, as well as private lawsuits alleging that its chatbots harmed children.
Kentucky has alleged that Character.AI bots encouraged users to cut, starve or kill themselves. Pennsylvania has alleged that bots presented themselves as doctors. Character.AI has said it worked to prioritize user safety. Reuters also reported that the company reached preliminary settlements in five private lawsuits in January, though the terms were not disclosed and court filings indicated the settlements had not yet been finalized or paid.
The proposed deal follows a marked change in Disney’s relationship with the startup. Disney sent Character.AI a cease-and-desist letter in September 2025 over unauthorized use of Disney characters; Character.AI said it removed those characters. Earlier this month, Disney hired former Character.AI chief Karandeep Anand as its chief technology officer, according to Reuters.
This story draws on original reporting from Ars Technica.