Disney offers $20 million for a Character.AI IP license in bankruptcy
Disney’s $20 million Character.AI bid sets a floor for selected IP, but it is not an acquisition and can be topped.
By Renata Fuchs · Policy Reporter
· 3 min read
Disney has offered $20 million for a non-exclusive, perpetual license to selected Character.AI intellectual property as the chatbot company enters Chapter 11. The Disney Character.AI $20m bid is not a purchase of the company or its platform, and it can be surpassed in the court-supervised sale process.
Character Technologies, the owner of Character.AI, filed its case in the U.S. Bankruptcy Court for the District of Delaware and said it intends to sell all or substantially all of its assets. Disney’s proposed agreement covers certain intellectual property and related company claims, according to Deadline and Reuters. Neither report identified the specific technology at issue or described Disney’s intended use for it.
For Disney, the proposal follows its hiring of former Character.AI chief executive Karandeep Anand as chief technology officer earlier this month. It also marks a reversal from September 2025, when Disney sent Character.AI a cease-and-desist letter over unauthorized use of its characters. Character.AI said it removed those characters, Reuters reported.
Is Disney buying Character.AI?
No. Disney is the stalking-horse bidder for a limited, non-exclusive license, not the confirmed buyer of Character.AI, its brand, users or operating service. A stalking-horse offer establishes an initial price in a bankruptcy sale and invites competing bids. Character.AI said Disney’s offer remains subject to higher or better proposals.
The non-exclusive structure also means that a final sale to Disney would not give it sole rights to the covered technology. The court-supervised process is expected to run through late November or early December 2026, according to Character.AI’s statements reported by Reuters and Deadline.
Financial pressure and legal claims
Court documents cited by Reuters put Character Technologies’ estimated assets and liabilities at $50 million to $100 million. The company had roughly 12 million active users but was unprofitable, losing about $8 million to $9 million each month because of computing and AI-talent costs, the documents said.
Character.AI has also faced investigations and lawsuits over alleged harms from its chatbots. Kentucky has alleged that bots encouraged users to cut, starve or kill themselves, while Pennsylvania has alleged that bots represented themselves as doctors. Reuters reported that the company reached preliminary settlements in five private suits in January, though later court records indicated the deals had not been finalized or paid. Character.AI has previously said it worked to prioritize user safety.
The company says its platform will remain online during the bankruptcy. Its continued operation after the sale is less certain: Character.AI has said it could shut down if no buyer takes on the business. Disney declined to comment to Reuters on the proposed sale, leaving open whether it will remain the winning bidder and whether it has any plan to operate a consumer chatbot service.
This story draws on original reporting from Ars Technica.
