Character.AI Files for Bankruptcy: Is It Shutting Down and What Happens to Your Chats

Character.AI is still running. On October 12, 2026 its parent company, Character Technologies, Inc., filed for Chapter 11 in the US Bankruptcy Court for the District of Delaware (case 26-11603) so it can sell its assets under court supervision. Disney has made the opening bid: $20 million for a non-exclusive, perpetual license to some of the company's technology and intellectual property. Disney also plans to hire most of the staff. It is not buying the app, the accounts or the chats. If no other buyer agrees to keep the platform running, the company says it will shut it down. The sale is supposed to close in late November or early December 2026 (Character.AI statement, CNBC).

For you, that means chats and subscriptions work today and nothing is promised past December. A data export takes weeks to arrive, so if your chats matter, request it now (steps below). This page is built from the company's statement, the court filings and news reports. We will update it as the case moves.

2021. Two former Google researchers, Noam Shazeer and Daniel De Freitas, found Character.AI.

2023. A funding round values the company at $1 billion.

August 2024. Google pays about $2.7 billion for a license to Character.AI's technology and hires back both founders and about 30 researchers. After that the company stops training its own models and switches to third-party ones (Trending Topics).

October 2024. Megan Garcia sues Character.AI and Google after her 14-year-old son died by suicide following months of conversations with a chatbot on the platform. More family lawsuits follow in Texas, Colorado and New York.

September 2025. Disney sends a cease-and-desist letter over its characters on the platform. Character.AI removes them.

November 2025. Users under 18 lose open-ended chat, and age checks arrive.

January 7, 2026. Character.AI and Google agree to settle the family lawsuits in Florida, Colorado, New York and Texas. Neither side disclosed the terms (Reuters via Channels TV). A day later Kentucky's attorney general sues, alleging the company preys on children (Spectrum News).

May 2026. Pennsylvania sues, alleging chatbots posed as licensed doctors (Scripps News).

September 18, 2026. Disney names Karandeep Anand, Character.AI's chief executive, as its first chief technology officer. Several of the company's engineers are expected to follow him (American Bazaar).

October 12, 2026. Chapter 11 filing. Colin Adams, now running the company, signs the first-day declaration.

October 14, 2026. First hearing before Judge Brendan Shannon. Attorneys general from 39 states and Washington, D.C. file a list of conditions for any buyer.

Coming up. The proposed schedule: bids due November 20, auction November 23, sale hearing November 24. Disney's deal has to close by December 17 (PPC Land, from the docket). These dates still need the court's approval and can move.

Disney Worldwide Services is the stalking-horse bidder. In bankruptcy that means its offer sets the floor: anyone can come in with a higher or better bid before the auction, and Disney's terms are what everyone has to beat.

For $20 million Disney gets a non-exclusive, perpetual license to "certain Company intellectual property" (code and patents, as PPC Land reads the docket) and certain legal claims. It will also provide transition services for a limited time, run by former Character.AI employees it has hired (PPC Land).

Disney does not get the Character.AI app, the website, user accounts, chat histories or the characters users made. At the October 14 hearing the company's lawyer, Erin Fay, told the court Disney is not interested in user data (Reuters).

"Non-exclusive" matters here. Character.AI can license the same technology to someone else, and Disney can't stop a second buyer from taking over the app. So the real question for users is whether anyone bids for the platform itself. As of October 14 the company's lawyer said no one had.

A year ago Disney was sending Character.AI legal letters over unlicensed Disney characters. In this deal it takes the technology and the engineers and leaves the product behind.

The company says it was losing $8 million to $9 million a month before it filed, and it blames legal costs plus the price of computing power and AI talent (Reuters). The CEO's declaration puts advertising revenue at about $2.5 million in August 2026 (PPC Land).

The petition estimates assets and liabilities at $50 million to $100 million each, with 100 to 199 creditors. The largest unsecured claim is Google's, about $4.15 million in unpaid bills. Next comes the law firm Hogan Lovells at about $2.13 million. Pennsylvania, Kentucky and one minor plaintiff are listed as disputed litigation claims with no amount (PPC Land).

Our reading of those numbers: after the 2024 Google deal the company stopped building its own models and started renting them, so it paid for every message its users sent. Its users talk a lot: Reuters reports an average of two hours a day per active user. The lawsuits added legal bills, and the November 2025 under-18 chat ban cut off some of its most active users. The filings themselves blame development costs, litigation and regulation.

A buyer keeps the platform running. Someone outbids Disney for the app and the user base and keeps the site open. Character.AI says it hopes for this outcome. The states will push that buyer to accept their safety and privacy conditions, so even this best case comes with stricter rules.

License only, then shutdown. Disney's bid, or a higher bid for the same technology, wins, and no one takes the app. In its own announcement the company says it will wind the platform down in that case. Chats would be gone, apart from whatever users exported.

A buyer takes the app and changes it. A company buys the platform and the user data but runs it differently: other rules, other prices, maybe a different product. Character.AI's privacy policy allows user data to move to a buyer in an asset sale. The attorneys general want every user to get a chance to delete their data first.

As of October 14 nobody had offered to buy the platform or the user data. That makes the second outcome the default unless a bidder shows up by November 20.

The filings put current and past users at about 163 million. The company says users are not creditors in the case. It will post notices on its blog, on the claims agent's site and inside the app, and says emailing every user would cost too much (PPC Land).

Disney's bid excludes user data. Another bidder could still bid for it. Character.AI says your information "remains protected under our Privacy Policy", but that policy allows data to be transferred in a sale of company assets, and it does not say which data.

That is why 39 state attorneys general and Washington, D.C. joined the case on day two. Their filing lists nine conditions for any buyer, including:

• age checks that do not rely only on a self-declared birth date;
• keeping minors out of open-ended chats;
• removing characters that pose as therapists, doctors, lawyers or other licensed professionals;
• limits on using chat content for training or advertising without valid consent;
• a chance for every user to delete their data before any sale.

The states also reserved the right to ask for a consumer privacy ombudsman, an independent official who reviews how personal data is handled in a bankruptcy sale (PPC Land). New York's attorney general, Letitia James, put it this way: "This company has collected some of the most private thoughts children have ever shared" (Reuters).

If you live in the EU or the UK, GDPR gives you the right to get a copy of your data and to have it erased. Character.AI's regional privacy notices also let you object to your data being used to train its models.

1. Request a data export today. On the web: your profile, Settings, Account, Manage Account & Data, Export Data. In the app: your profile, the settings icon, then Export Data under Legal & Privacy. Character.AI's help page says it can take three to four weeks. The download link arrives by email and expires after seven days, so watch your inbox (Notebookcheck). A request made in mid-October should arrive in early to mid-November, before the auction.
2. Save the chats that matter by hand as well. The help page does not say whether the export includes your conversations. Copy the important ones into a document or take screenshots.
3. Save your own characters. If you created a character, open it in edit mode and copy its name, greeting, description and definition into a text file. That is enough to rebuild it in another app.
4. Do not delete your account before the export arrives. Deletion cannot be undone, and you lose the chats along with it.
5. Check how you pay. Billing is unchanged for now, and the company has promised advance notice before paid features change. A subscription bought through the App Store or Google Play has to be cancelled there; deleting your account may not stop it. Users are not creditors in the case, so this is a bad moment to prepay for a long plan.
6. If you don't want your data included in a sale, delete the account once the export has arrived.
7. Watch the dates. November 20 (bid deadline), November 24 (sale hearing) and December 17 (Disney's deadline). Updates go up on the Character.AI blog and on the Stretto case page, where the court documents are posted.

Character.AI combined a huge library of user-made characters, a free tier, and a filter that kept romance at PG-13. No single app replaces all of that, so pick by what you used it for. Our full comparison is in Character.AI alternatives: 9 apps tested. The publisher of this site makes Nika and Sebastian.

A big free library of community characters: Talkie or Chai. Closest to the Character.AI browsing experience. Chai rations free use and blocked free access in more than 20 countries in January 2026.

Your own characters on open models: Janitor AI. A free built-in model, no API key needed, Janitor+ at $12.99 a month. A good home for the definitions you saved.

Long memory and voice calls: Nomi or Kindroid. Memory that holds for weeks, real-time calls, $13.99 to $15.99 a month.

A companion that remembers you and a relationship that develops: Nika. 31 relationship levels that rise and fall depending on how you treat her. Three layers of memory, including up to 10 key facts per story that you can read, edit and pin. An eight-step scenario editor where you can paste the greeting and description you saved, a tile-based character constructor, 20+ official stories and hundreds from the community. It works in an Android app, in the browser and in Telegram, and it is free to start. Nika is for adults 18+ only. Where Nika is weaker: you won't find millions of community characters, only hundreds of stories.

If you are under 18: Character.AI already closed open-ended chat to you, and every companion app on this list is for adults.

Is Character.AI shutting down?

Not yet. The site and the apps are working, and subscriptions are being billed as usual. The company says it will shut the platform down if the sale does not produce a buyer willing to keep it running. We should know by the sale hearing, proposed for November 24, 2026.

Did Disney buy Character.AI?

No. Disney offered $20 million for a non-exclusive license to some of the technology and intellectual property, and it hired the former CEO and many of the engineers. The app, the accounts and the chats are not part of its offer.

Will my chats be deleted or sold?

If the platform shuts down, chats you have not exported will be lost. If a buyer takes the platform, your data may go with it, subject to the privacy policy and whatever conditions the court sets. Export what you want to keep now, and delete your account afterwards if you don't want your data in a sale.

Will I get a refund for c.ai+?

No refund program has been announced. Billing continues unchanged, and the company promises to warn subscribers before paid features change. Users are not creditors in the case. App Store and Google Play purchases follow those stores' refund rules.

Why did Character.AI go bankrupt?

By its own account it was losing $8 million to $9 million a month, between legal costs, computing and staff. It stopped building its own models in 2024, and it lost part of its audience when it closed open-ended chat to minors in November 2025.

How long does a Character.AI data export take?

Three to four weeks, according to the help page. The email link expires after seven days.

Can I move my characters to another app?

Not automatically. There is no export format other apps can import. If you made the character, copy its greeting, description and definition from the edit screen and paste them into a character creator elsewhere, such as Janitor AI or Nika's scenario editor.

Is Google buying Character.AI back?

Nothing suggests it. Google appears in the case as the largest unsecured creditor, owed about $4.15 million, and it has not been reported as a bidder.

Character.AI is still open and up for sale. The only bid so far is Disney's, and it covers the technology and the people, not the app. Unless another buyer shows up by November 20, the platform will probably shut down around the end of the year. Request your data export today, copy the characters and chats you care about, and don't prepay for anything.

If what you'll miss is a character who remembers you and a relationship that changes over time, try Nika: in the browser or in Telegram. It's free to start and for adults only.