Character.AI Data Protections Remain Unresolved in Bankruptcy Sale

A coalition of 40 state attorneys general is asking a bankruptcy court to require protections for consumer information in any sale of Character.AI, while the available announcements do not specify whether user chats would transfer. Character Technologies, the company behind the chatbot platform, filed for Chapter 11 on Oct. 12, 2026. It plans to keep the platform operating during a court-supervised sale. Disney Worldwide Services agreed to serve as the stalking-horse bidder for a $20 million license covering certain intellectual property and company claims. The proposed license concerns specified assets and does not establish that Disney would receive users’ conversations.

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