Character.AI said on Monday that it has filed for Chapter 11 bankruptcy protection in the United States and agreed to sell some assets to Walt Disney for $20 million. According to ChainCatcher, the company has begun a court-supervised asset sale process that includes licensing certain intellectual property and is seeking court approval for auction rules that would name Disney as the lead bidder.

Disney's offer will serve as the baseline bid, and other bidders may submit higher offers. The company expects the sale process to be completed in late November or early December 2026 and plans to keep operating during the process, including the Character.AI platform.

Chief Executive Officer Colin Adams said the board determined, after a full review of available options, that the court-supervised sale process would best maximize value for all stakeholders. Court filings showed that Character Technologies, the U.S. company that owns the platform, listed estimated assets and liabilities of $50 million to $100 million.