Character.AI has filed for Chapter 11 bankruptcy protection in the United States to facilitate the sale of its assets to Disney. The company, which builds online bots for users to chat or roleplay with, is described as one of the first breakout startups of the generative AI boom.
In a press release and blog post published Monday, Character.AI stated that the bankruptcy filing is intended to support the transaction. The company has faced mounting scrutiny and lawsuits regarding the safety of its chatbots, yet it continued releasing updates and products in recent months.
The filing marks a significant shift for a firm that emerged early in the current wave of artificial intelligence development. Ongoing legal challenges related to user safety remain a factor in the proceedings.