What’s happened
On 12 October, the company behind Character.AI filed for Chapter 11 bankruptcy in the US. That doesn’t mean the app has shut down. It’s still running, and accounts and subscriptions work as normal. What it does mean is that the company is being sold off, and nobody knows yet who’ll end up with what.
Disney has made the first offer: $20 million for a licence to some of Character.AI’s technology. That’s not the same as buying the app. Disney isn’t taking on the app, the accounts or anyone’s chats. And when Character.AI filed, its boss said there wasn’t yet a buyer lined up to keep the app going.
How it got here
It’s been a rough couple of years for Character.AI. Families sued the company, its founders and Google, saying the chatbots had harmed their children. Two of those cases involved teenagers who died by suicide. All five settled in January, with no admission of fault. On top of that, the company was still losing around $8–9 million a month as recently as August. Something had to give.
What happens next
20 November: deadline for anyone wanting to bid
23 November: the auction
24 November: the court hearing to approve the sale
Character.AI expects it all to wrap up by late November or early December. If a buyer takes it on and keeps it running, your child might not notice much difference. If nobody does, Character.AI says the platform will be shut down.
What about my child’s chats?
This is the part I’d be more interested in than whether the app survives.
Disney’s offer doesn’t include any user data, so your child’s conversations wouldn’t go to Disney. But whether chats are part of the wider sale hasn’t been made clear yet. Character.AI’s privacy policy allows it to pass on some information if the company is sold, without spelling out exactly what.
There is one safeguard. Under US bankruptcy law, if selling people’s personal data would go against the company’s own privacy policy, the court has to bring in an independent privacy ombudsman to look at it. That’s something, but it’s not a guarantee.
What you can do now
There’s no need to panic or delete anything tonight. But if your child has been using Character.AI, this is a good excuse to:
Ask them what they use it for. Keep it casual. You’ll get much more out of curiosity than a grilling.
Get a copy of their chats, then delete the account, if you want them gone. You can request an export from their profile settings, but it can take three to four weeks to arrive. Ask for it now, wait for the download, and then delete the account.
Talk about what these apps actually are. A chatbot that feels like a friend is still run by a company, and that company can change hands. Most teenagers have never thought about where their chats end up.
Worth knowing: since November 2025, Character.AI hasn’t allowed under-18 accounts to have open-ended chats with characters. If your child is still chatting freely on there, it’s worth asking how.
Whatever happens to Character.AI, there’ll be another companion app to take its place. That’s why Halo Aware covers apps like this one, not just the names everyone knows. The app your child uses might change. The pattern doesn’t.
