Character.AI: from state lawsuits to Chapter 11
Two state lawsuits and a GDPR fine over minors, then a Chapter 11 filing to sell the company. The steps in order, with what happens to users next.
5 steps · Updated
Character.AI spent 2026 answering regulators about children. Kentucky and Pennsylvania sued, and Italy's privacy regulator fined it over age checks. In October the company filed for Chapter 11 to sell itself, with Disney as the opening bidder. The filing calls AI entertainment costly to build; it doesn't blame the lawsuits, so we don't either.
The timeline
What to watch next
- : Sale expected to close by the end of November or early December (company estimate) (source)