On October 12, 2026, Character Technologies Inc. announced a voluntary Chapter 11 case and a court-supervised sale process, with Disney Worldwide Services, Inc. named as the stalking-horse bidder under a proposed $20 million agreement. The proposal covers a non-exclusive, perpetual license to certain company intellectual property and company claims, plus transition services; higher or better offers can still be made under Section 363 of the U.S. Bankruptcy Code, so the agreement is not a completed acquisition. Character Technologies’ announcement

What Disney’s proposed agreement covers

A stalking-horse bidder is the named bidder whose proposed agreement is part of a sale process that remains open to higher or better offers. Here, Disney Worldwide Services, Inc. would receive a non-exclusive, perpetual license to certain Character Technologies intellectual property and company claims. The agreement also includes transition services using former Character Technologies employees whom Disney hired. Those services are intended to help operate the platform safely for a limited period and support the sale process.

Character Technologies projected that the sale process and any resulting transaction closing would take place in late November or early December 2026. That is the company’s forecast, not a scheduled or completed closing.

What the proposal means for Character.AI users

Character.AI said on October 12 that its services remained accessible during the sale process and that subscriptions remained active with billing unchanged for now. The company said it intended to notify subscribers in advance if a service change affected paid features. Character.AI’s update

Character Technologies said it expected minimal service disruption during the process. Afterward, it said, the platform would be wound down if no transaction provided for its continued operation. The proposed license alone does not settle whether the platform will continue after the sale process.

What the privacy policy says

Character.AI’s privacy policy, effective July 1, 2026, permits certain information to be disclosed in connection with negotiations or the closing of a company-asset sale. Character.AI also said its data practices would remain unchanged during the sale process. Character.AI’s privacy policy