Character.ai Files for Chapter 11 to Sell Assets to Disney Affiliate
The figures in the filing show a service with millions of users whose subscription and ad revenue still ran roughly $8 million to $9 million short of its computing bill every month, which is why the sale, not the restructuring, is the point of the Chapter 11.
Reporting from 1 source: GIGAZINE.
Character.ai began Chapter 11 bankruptcy proceedings on October 12, 2026, saying the filing lets it sell certain assets to an affiliate of The Walt Disney Company. A court affidavit puts monthly AI computing costs at $13.8 million in 2024, $10 million in 2025, and $56.1 million from January to August 2026, against revenue that peaked at $5.3 million per month. Total liabilities are estimated between $50 million and $100 million.
The affidavit filed with the bankruptcy court describes a business that never closed the gap between usage and cost. Subscription revenue peaked at $2.8 million a month, and all revenue including advertising reached $5.3 million a month. Computing alone ran $13.8 million a month in 2024 and $56.1 million in the eight months from January to August 2026.
Character.ai also carried legal exposure. Lawsuits alleged its chatbots induced minors to commit suicide or violence, and Disney sent a letter in September 2025 demanding the service stop using its characters. Disney is now the buyer named in the sale process.
Synthesized by Yomimono from the 1 cited source below, including Japanese-language reporting where cited, then editorially reviewed before publishing.