The American start-up Character.ai has reported “significant difficulties” on the legal, regulatory and operational levels to justify its decision to place itself under the protection of Chapter 11 of the American bankruptcy law, according to a press release published on the night of Monday to Tuesday.
Launched in September 2022, a few weeks before ChatGPT, the Character.ai application offered to personalize its conversational robot according to its tastes and interests. The fun and individualized dimension of these interfaces quickly attracted young audiences, with some turning these conversational robots into AI companions.
In October 2024, the young company from Menlo Park (California) was sued by Megan Garcia, whose 14-year-old son had killed himself in February of the same year. This mother argued that the teenager had become emotionally dependent on a chatbot inspired by the literary and television series “Game of Thrones”. The company was subsequently targeted by several other proceedings related to similar allegations.
In October 2025, Character.ai decided to block access to its products for minors, under public pressure and following the accumulation of lawsuits. In January 2026, the Californian company reached an amicable agreement with several families.
Accused of violating intellectual rights
Character.ai was also in the sights of companies contesting the unauthorized use of fictional universes and characters protected by intellectual property law. This was the case of Disney, in particular, which in September 2025 ordered the platform to remove all content linked to the entertainment giant.
Ironically, in September 2026, Disney poached the boss of Character.ai, Karandeep Anand, to become its technology manager. After opposing Character.ai, the group headquartered in Burbank (California) has even already offered to take over certain assets for $20 million as part of the bankruptcy filing, the start-up announced.
The agreement also provides that Disney will put several former employees of the AI company that it had poached into the service of Character.ai. They must in particular facilitate the safeguard procedure and the search for buyers for the company’s assets.
