Character.ai Begins Chapter 11 Process to Seek Court-Supervised Sale

Summary

Character.ai announced on October 12, 2026, that it has initiated a voluntary Chapter 11 bankruptcy process to pursue a court-supervised sale of the company or substantially all of its assets. The company said its board chose this route after reviewing alternatives amid legal, regulatory, and operational headwinds. Character.ai hopes the sale will produce a viable proposal that allows the platform to continue operating; without an actionable bid, it says the service will be wound down. The company currently expects the sale process to finish by the end of November or possibly early December 2026. The platform remains online and all services are available at this time. Paid subscriptions remain active and billing is unchanged for now, with advance notice promised if service changes affect paid features. Character.ai also said its privacy and security practices remain unchanged, while users can delete their accounts or export their data through the app or website. The company said maintaining a safe experience for the community remains a priority during the process.