Character.ai said it filed for Chapter 11 bankruptcy protection, with its CEO blaming significant legal, regulatory and operational headwinds, and it will keep operating while seeking a buyer. The Walt Disney Co. agreed to pay $20 million for a non-exclusive, perpetual license to the company's intellectual property. The chatbot provider has faced lawsuits over teen safety, including a wrongful death suit from a Florida family that it settled earlier in 2026, and several states have sued it. The company expects a court-supervised sale by late November or early December, and says subscriptions remain active and customer data is protected under its privacy policy, which allows disclosure in a sale.
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