Character.AI’s bankruptcy sale process now has court-approved bidding rules, with offers due November 24 at noon ET and Disney positioned as a stalking horse bidder for certain assets. The company is seeking to sell, license or otherwise dispose of all or substantially all its assets through its Chapter 11 case. Disney’s agreement remains subject to competing offers judged higher or otherwise better, so its designation does not establish it as the final buyer.
The Bankruptcy Court approved the bidding procedures on November 4, along with the designation of an October 13 agreement with Disney Worldwide Services, Inc. as a stalking horse agreement. That agreement covers a sale or license of certain assets identified as the Disney Target Assets. The procedures also allow additional stalking horse purchasers to be designated for assets outside that group, with those agreements also subject to better competing offers.
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An auction is scheduled for December 1 at 10 a.m. ET, unless it is cancelled or adjourned under the court’s procedures. It may take place at a location chosen by the company or through a videoconference, with participation details to follow. The court is scheduled to consider the sale at hearings on December 3 and 4 at 9:30 a.m. ET, unless those proceedings are adjourned.
The company plans to file the winning bidders’ identities after the auction concludes. If Disney wins, Character.AI will ask the court to approve a sale to Disney through a proposed order already identified in the case. The company filed its voluntary Chapter 11 petition on October 12 in the United States Bankruptcy Court for the District of Delaware.
Most objections to the proposed sale must be filed by November 18 at 4 p.m. ET, while objections involving contracts follow separate procedures. After auction results are served, parties may raise certain further objections at the sale hearing, including challenges concerning auction conduct and changes to a stalking horse agreement.
In October, Character.ai said it would pursue a buyer able to keep the platform running, but would wind down the service if no suitable bid emerged. At that time, services remained accessible and paid subscriptions continued without a billing change. The company then expected the sale process to conclude by late November or possibly early December 2026.
