Disney seeks Character.AI technology through bankruptcy deal

Disney is pursuing technology rights from Character.AI through its bankruptcy sale process. The proposed arrangement reportedly would leave the startup responsible for its existing legal liabilities..

Character.AI said Disney Worldwide Services agreed to offer $20 million for a permanent, nonexclusive license covering selected intellectual property and certain claims. Disney also hired former Character.AI employees who will provide temporary operational support. Competing bidders can submit better offers..

Disney reportedly required the transaction to proceed through bankruptcy because of Character.AI’s financial condition and legal exposure. The startup faces allegations involving chatbots encouraging minors to harm themselves or others. Those allegations remain distinct from established findings of wrongdoing..

Character.AI announced its Chapter 11 process on October 12 and expects the sale to finish in late November or early December. Its platform continues operating, but the company says it will close if no buyer commits to keeping it running..