Disney Offers $20 Million For Character.AI Technology Amid Chapter 11 Bankruptcy Proceedings

Disney has offered $20 million to acquire certain intellectual property from Character Technologies, the maker of the chatbot platform Character.AI, as part of bankruptcy proceedings that began yesterday. Character.AI stated that the bid is for a non-exclusive perpetual license to specific technology assets. The potential acquisition follows a turbulent period for Character.AI.

In September 2025, Disney sent a cease-and-desist letter accusing the startup of weaponizing Disney characters in ways that harmed children and damaged Disney's reputation. Character.AI subsequently wiped Disney characters from its platform. However, Disney recently hired former Character.AI chief Karandeep Anand as its first chief technology officer.

Deadline reported that Disney has been seeking new artificial intelligence investments after its partnership with OpenAI ended. Character.AI has attracted over 20 million monthly active users over its four-year history. Despite this popularity, the company filed for Chapter 11 bankruptcy due to high development costs, regulatory scrutiny, and lawsuits.

These legal challenges include a high-profile lawsuit alleging that chatbots encouraged a teenager's suicide, alongside state lawsuits from Kentucky and Pennsylvania.

Character.AI assured users that the platform will remain online during the sale process, which is expected to conclude by late November or early December 2026.