Character.ai Files for Chapter 11 Bankruptcy to Facilitate Court-Supervised Sale

Character.ai has initiated a voluntary Chapter 11 bankruptcy process to facilitate a court-supervised sale of the company. The board determined this path offers the best opportunity to maximize value for stakeholders amid significant legal, regulatory, and operational headwinds faced over the past year.

The company aims to secure an actionable proposal that allows for the continued operation of the Character.ai platform. If such a bid is unavailable, the platform will be wound down. The sale process is currently expected to be complete by the end of November or perhaps early December 2026.

For current users, the platform remains up and running with all services accessible. Paid subscriptions remain active, and billing is unchanged for now, with advance notice promised if service changes affect paid features. User data continues to be protected under the existing Privacy Policy, and users retain the ability to delete their accounts or export their data through the app or website.