Disney Bids for Character.ai Assets as Chatbot Provider Files for Chapter 11

Last month, Disney hired Character.ai's CEO for a new chief technology officer role. Now, a month later, many of the company's assets may follow Character.ai, the controversial chatbot company that lets users create and interact with a mix of original and user-generated characters, after it filed for Chapter 11 bankruptcy on Monday.

Disney tapped the CEO for a new CTO position last month — and now, a month later, many of the company's assets may be following.

, the controversial chatbot company that allows its users to create and interact with a collection of original, user-generated characters, filed for Chapter 11 bankruptcy on Monday to begin a "maximized sale" of potentially all of its assets. As part of the filing, Disney Worldwide Services, a subsidiary of House of Mouse, has agreed to pay $20 million to become the stalking horse bidder for "a perpetual non-exclusive license to certain of the Company's intellectual property and certain of the Company's claims." Related Stories Taylor Swift's 'Patient Zero' Holds No.1 on Singles Chart for Second Week Taylor Swift has spent her 100th week at No. 1 on the Billboard 200 as 'Life of a Showgirl' tops the second week of the 'Encore'.

The deal will also see former employees provide transitional services "for a limited time" as part of Disney's hiring of Karandeep Anand, the chatbot provider's former CEO, to keep the platform operational while the sale goes through. It expects to complete the auction process by late November or early December. Popular in Variety

"Over the past year, it has taken meaningful steps to preserve and improve its business in the face of significant legislation, regulation and legislation," CEO Colin Adams said in a statement. As we navigate this process, maintaining a safe and engaging user experience for our community remains a top priority."

Founded in 2021, it emerged in the artificial intelligence space as a way for users to engage with chatbots based on fictional characters, though it sparked controversy over hosting characters based on unlicensed intellectual property and leading users to harm themselves or impersonate medical professionals. While it has said the user-generated characters are fictional and intended for entertainment purposes, the company settled several lawsuits alleging mental health issues in January after years of litigation.

Recently, the company introduced a series of micro-dramas with characters native to the platform.

Disney's interest in the property reflects the company's embrace of AI technology in recent years, after last year's short-term deal with OpenAI to license characters for its Sora generator and the selection of several AI companies for its 2026 "accelerator" program, which will put the company's resources at the disposal of a range of fun experiences for startups.