Character.AI files for Chapter 11 to sell the company

Character.AI said on 12 October that it has started a voluntary Chapter 11 bankruptcy process to run a court-supervised sale of the company, after what it called "significant legal, regulatory, and operational headwinds". The petition by Character Technologies, Inc. was filed in the US Bankruptcy Court for the District of Delaware. The company said it hopes the sale will produce a bid that keeps the platform running, but if none is available the platform will be wound down. It expects the sale process to be complete by the end of November or perhaps early December 2026. For now the service stays up, paid subscriptions remain active and its privacy and security practices are unchanged.

What it means for business: companies that use Character.AI, or whose staff or customers do, should plan for a possible change of owner or shutdown; the company says users can export or delete their data through the app or website.