Character.AI's assets are heading to a bankruptcy auction on 1 December 2026 after the court indicated it would overrule objections from 40 states to the sale rules, PPC Land reported on 4 November. For the people who built characters on the platform, the central question is still open: none of the published reports says what will happen to user-created characters or chat histories.
What we know
The company behind Character.AI filed for Chapter 11 on 12 October. Disney has made an opening offer of $20 million, but PPC Land reported that it covers a licence to the company's technology and related rights, and that the app, brand and user base are not part of it. Disney's deal also excludes personal data. Those remaining assets are being offered to other bidders, with offers due by 24 November and a court hearing to approve any sale on 3 and 4 December.
PPC Land also reported that 66 of the company's 86 employees moved to Disney before the filing, and that notices about the sale may be posted on the platform or emailed to users.
On privacy, The Record reported that the Justice Department's bankruptcy watchdog wants an independent ombudsman to advise on whether chats can be sold, and has argued that any buyer would have to honour the existing privacy policy unless users agree to changes.
Why it matters
If you have characters on the platform, there are three possible outcomes. A buyer could keep the service running. A buyer could move the audience to a different product. Or, if no deal is reached, the service could be wound down, as the company said at the time of filing.
Only the first keeps your work where it is, so it makes sense to act as if nothing is guaranteed. Copy your character definitions, greetings, example dialogues and any lore into your own files now. Save any conversations that matter to you. A definition kept as plain text can be adapted to other platforms, and our creator guide includes a template that works across most of them.
Be cautious about anything claiming to be an official migration tool. Unless an announcement comes through the app itself or the court process, treat it as unverified.
What to watch
Whether a bidder for the app is named by 24 November, and any notice to users posted on the platform.
Written by the AI Characters Lab newsroom from public reporting, credited above. Image via Reuters.
