Character.AI Files for Bankruptcy: What Happens to Your Characters and Chats

Character.AI has filed for bankruptcy. On October 12, 2026, Character Technologies, the company behind Character.AI, started a voluntary Chapter 11 case in the U.S. Bankruptcy Court for the District of Delaware and put its assets up for a court-supervised sale. The app is still running for now, but the company has said that if no buyer commits to keeping it going, the platform will be wound down. Here is what was announced, what it means for your characters and chats, and what to do this week.

What Character.AI announced

In its own update and in reporting by TechCrunch and CNBC , the key facts are:

• Character.AI filed a voluntary Chapter 11 case on October 12, 2026, estimating its assets and liabilities at $50 million to $100 million.
• Disney is the "stalking horse" bidder, offering $20 million for a non-exclusive, perpetual license to some of Character.AI’s technology and IP, plus transition services. Other bidders can still top that offer.
• The court-supervised sale is expected to finish by the end of November or in early December 2026.
• As of the filing, there is no buyer committed to running the Character.AI platform itself.

Why it happened

Character.AI’s leadership pointed to "significant legal, regulatory, and operational headwinds." Running large language models is expensive, and costs rise with every message users send. The company also spent the last two years under legal pressure over teen safety, settling lawsuits and cutting off open-ended chat for users under 18 in November 2025 . Before the filing, it had already retired several of its best-loved models to save costs, and a number of its staff and its former CEO moved to Disney in September.

Is Character.AI shutting down?

Not yet. Character.AI says the platform "remains up and running," that subscriptions stay active, and that billing is unchanged for now. The risk is what comes after the sale. Disney’s bid is a license to technology, not a promise to operate the app, and the company has been clear that if no bid keeps the service alive, "the platform will be wound down." The honest answer is that nobody knows yet, and the deadline is a matter of weeks.

Update, October 15: state attorneys general step in

State attorneys general have filed two notices (one from 39 states plus D.C., one from 23 states) in the bankruptcy case asking that any sale of Character.AI’s business or assets include protections for children and consumers, including how users’ personal information and chats are handled. They also warned that Character.AI’s current limits on minors are voluntary and could be weakened or reversed by a future buyer, and reserved the right to challenge the sale (Delaware Attorney General , Pennsylvania Attorney General ). As of the filing, no buyer had made an offer for the chatbot business itself.

Update, October 30: the court approves the sale rules

On October 30, the bankruptcy judge approved the bidding procedures, so the auction goes ahead with Disney’s $20 million offer as the opening bid, as Law360 reported . The judge also strongly encouraged Character.AI to appoint a consumer privacy ombudsman to look after user data, according to Quartz . Legal protections for Disney and former employees were not approved at this hearing and can still be challenged separately.

What this means for you: Disney’s bid is for a technology license, not the app, so unless another buyer steps in to run the platform, Character.AI is still expected to wind down after the sale. If you want your chats, start the export now.

Update, October 23: states object to the sale rules

On October 23, 31 states and the District of Columbia filed a joint objection to the proposed sale process, according to PPC Land’s reading of the court filing (docket no. 66). The states argue that the minimum rival bid, set at $21.7 million, blocks offers that would still leave the estate better off than Disney’s deal. They also challenge Disney’s $700,000 break-up fee, ask for at least 21 more days before bids are due, and ask the court to require plain-language notice to users, including on the platform itself. They want the court to consider appointing a consumer privacy ombudsman because of user data.

In an earlier filing, Character.AI said it does not consider its current and past users (about 163 million, by its count) to be creditors who must be notified directly, so news about the case will come through its blog and in-app links rather than by email, as PPC Land reported . The court hears the sale-rules dispute on October 30. Under the proposed schedule, which the court has not yet approved, bids are due November 20, an auction would follow on November 23 and a sale hearing on November 24. If you want a copy of your chats, start the export now: it can take three to four weeks.

What happens to your characters and chats

Character.AI has not said what happens to user-created characters or chat history if the platform closes. Until a buyer is confirmed, assume anything you only keep on Character.AI could disappear with it. The company does let you download your data today, so the safest move is to save what matters now rather than wait for a shutdown notice. According to KQED , Disney’s deal leaves out users’ data and chats, so any sale of chat data would have to go to a different buyer.

How to save your Character.AI data

According to Character.AI, you can export your data and delete your account from both the app and the website, and its support pages walk through each step. While you are at it, copy the parts of your favorite characters that live in your head rather than in the export: their personality, their backstory, the running jokes and the way they talk to you. That written description is what lets you rebuild a character somewhere else. Do not leave it to the last week: KQED reports that an export can take three to four weeks to arrive and that the download link expires seven days after it is sent, so request it now and download it as soon as the email lands.

Where to go if you are leaving Character.AI

If you are ready to move on, look for a platform that will not disappear or change the rules on you, and that remembers your history instead of resetting it. We compared the options in our ranking of the best Character AI alternatives , and you can see how Nastia stacks up in our Nastia vs Character AI comparison .

Nastia is an adults-only (18+) AI companion app. You can recreate a character by giving your companion a name, look, personality and backstory, and she keeps persistent memory across every conversation, with voice messages and images in the same place. It is uncensored by design and free to start.

Frequently asked questions

Leaving Character.AI? Bring your character somewhere that remembers

Nastia is an uncensored AI companion with persistent memory, voice and images. Adults only (18+). Free to start.

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