Character.ai Files for Bankruptcy, Disney Bids $20 Million for Assets
AI company Character.ai has filed for Chapter 11 bankruptcy protection amidst user safety concerns and a copyright dispute with Disney. Disney has emerged as the lead bidder for the startup's assets with a $20 million offer.
AI company Character.ai, once valued at $1 billion, filed for Chapter 11 bankruptcy protection on Monday. The company stated that the court-supervised sale process offers the best opportunity to maximize value for all stakeholders while negotiations continue.
Disney has emerged as the lead bidder with a $20 million offer for certain Character.ai assets, including a non-exclusive license to some of the company's intellectual property. The transaction is expected to conclude by late November or early December.
Character.ai, founded by former Google researchers Noam Shazeer and Daniel De Freitas, allows users to chat with virtual personalities. The company reached a $1 billion valuation approximately one year after raising $150 million in funding.
The bankruptcy filing represents a significant reversal for one of the early breakout successes of the generative AI boom. The company has recently faced challenges related to user safety concerns and a high-profile copyright dispute with Disney.