Character AI files for bankruptcy as Disney bids 20 million dollars

Artificial intelligence chatbot platform Character.AI filed for voluntary Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on October 13. Decrypt and Forbes both reported that the company, which was once valued at 1 billion dollars, is seeking a court-supervised sale of all or substantially all of its assets. Reuters, Forbes, Dealroom, NBC News, and Law Commentary all confirmed that Disney has submitted a 20 million dollar bid for some of the company assets. [1][4][5][6][7][8]

Decrypt reported that the bankruptcy filing occurred two weeks after Character.AI launched new models. Rather than attempting to restructure its balance sheet to continue operations long term, the company is seeking an immediate sale. If no purchaser agrees to keep the service running, the platform will shut down completely. [1]

Character.AI is a generative artificial intelligence chatbot service that allows users to engage in conversations with customizable characters. The service was created by former Google LaMDA developers Noam Shazeer and Daniel de Freitas. [10]

Forbes noted that the bankruptcy filing and Disney bid follow a copyright dispute between the companies. The Delaware court will now supervise the auction process to determine how the debts of Character.AI are settled or how its remaining assets will be transferred. [1][5]