Court Approves Character.ai Sale Bidding Process
Delaware bankruptcy court clears procedures for Character Technologies' asset sale, with Disney as stalking-horse bidder.
Updated on Nov. 7, 2026 in Artificial Intelligence
The U.S. Bankruptcy Court for the District of Delaware approved bidding procedures on Nov. 4 for the asset sale of Character Technologies, Inc., which operates Character.ai. Disney Worldwide Services, Inc. is the stalking-horse bidder for a $20 million transaction involving Disney Target Assets.
Why it matters
The procedures set a $21.7 million minimum competing bid for assets tied to Disney's proposed license deal, shaping how the company's assets may be sold under Chapter 11. The process allows additional stalking-horse bidders for other assets, subject to higher or better offers.
The minimum competing bid for Disney Target Assets is $21.7 million, compared with Disney's $20 million stalking-horse transaction, and the agreement includes a $700,000 break-up fee. Whether competing bids will meet that threshold before the Nov. 24 deadline remains unknown.
The players
Character Technologies, Inc.
The company behind Character.ai, an AI platform that lets users interact with chatbot characters, which is pursuing a Chapter 11 sale process.
Disney Worldwide Services, Inc.
The entertainment conglomerate's services arm serving as stalking-horse bidder with a $20 million proposed transaction for Disney Target Assets.
The details
The procedures cover a potential sale, license, or other disposition of all or substantially all of the company's assets. Interested bidders must submit offers by noon ET on Nov. 24, with an auction set for Dec. 1 and sale hearings on Dec. 3 and 4.
Timeline
Nov. 4: Court approves bidding procedures for the asset sale.
Nov. 18, 4 p.m. ET: Deadline for objections to the sale, other than contract-related objections.
Nov. 24, noon ET: Deadline for interested bidders to submit offers.
Dec. 1, 10 a.m. ET: Auction scheduled.
Dec. 3 and 4: Sale hearing scheduled.
Market Landscape
The Character.ai sale follows the Section 363 asset-sale route that lets distressed companies sell assets quickly under court supervision. Disney's stalking-horse position positions it as a licensing partner for the platform's assets while other bidders are invited to compete.
Users of Character.ai could see changes in ownership or licensing of the platform depending on which bid prevails at the December auction. The outcome will determine who operates the service going forward.
The takeaway
Watch the November and December deadlines if you rely on Character.ai, since the auction outcome will determine who runs the platform. Bankruptcy sale timelines move quickly, so updates may come before the sale hearings.
What happens next
Interested bidders must submit offers by noon ET on Nov. 24, an auction is scheduled for Dec. 1 at 10 a.m. ET, and sale hearings are set for Dec. 3 and 4.
Further reading
For broader context on AI company developments, see Artificial Intelligence coverage.
Source note: This article includes information reported by TokenPost.
