Character.AI files for bankruptcy, will sell some assets to Disney for $20M

Chatbot platform Character.AI said on Monday it has filed for bankruptcy in the U.S. and has agreed to sell some assets for US$20 million to Walt Disney. The generative AI platform has faced mounting legal challenges over its chatbots. Earlier this year, Character.AI and Alphabet’s Google settled a lawsuit by the mother of a 14-year-old Florida boy who killed himself after the startup’s chatbot allegedly encouraged him to do so.Kentucky has sued the company, saying its chatbots encouraged users to cut, starve or kill themselves, while Pennsylvania filed a lawsuit alleging its chatbots posed as doctors.According to Character.AI’s proposal, Disney will be a “stalking-horse” bidder — an initial prospective buyer — for a non-exclusive perpetual license to some intellectual property. Other bidders can top Disney’s offer. Get daily National news Get daily Canada news delivered to your inbox so you'll never miss the day's top stories. Character.AI expects to close the sale of all its assets by late November or early December. Character Technologies, its U.S.-based owner, listed estimated assets and liabilities of between $50 million and $100 million, according to a court filing. Story con...