Character.AI filed for bankruptcy: is it shutting down, and how do you save your chats?

Character.AI: a chatbot platform, made by Character Technologies Inc. of Redwood City, California, where users create AI characters with a name, personality and greeting, and chat with their own characters and millions made by other users.

Chapter 11: the part of the US Bankruptcy Code that lets a company keep operating under court supervision while it restructures its debts or sells its assets.

Stalking horse bid: the first agreed offer in a court-supervised sale. It sets the minimum price, and other buyers can try to beat it at auction.

Section 363 sale: a sale of a bankrupt company's assets under section 363 of the Bankruptcy Code, approved by the judge, which can pass assets to a buyer free of most claims.

Consumer privacy ombudsman: a person the court can appoint when a bankrupt company wants to sell customers' personal information, to advise the judge on protecting that information.

Persona: the AI version of you that you build on Afterlife.ai™ from your own memories, values, face and cloned voice, which talks in your words to the people you choose.

Executor Lock™: Idy's patent-pending system of named executors, Trusted Contacts, a verified death report and a sealed snapshot of your Persona that nobody can ever change.

Character.AI is not shutting down today, and the app still works. The company filed for Chapter 11 rather than Chapter 7, so it keeps operating while a court supervises the sale of what it owns. Its blog says the platform remains up and running, c.ai+ subscriptions and billing are unchanged for now, and the sale should be completed by the end of November or early December 2026. Former Character.AI engineers who moved to Disney keep the app running under a transition services agreement that can last up to five months from September 18, 2026.

The risk is what comes after the sale. Disney's $20 million bid buys a license to the technology, and its own term sheet says Disney will not acquire or operate the consumer platform, the user accounts, the brand or the website. Unless a different buyer bids to keep Character.AI running by the November 20 bid deadline, the company has said the platform will be wound down, and its CEO told the court the next step after the sale is a Chapter 11 plan of liquidation. That makes the next five weeks the window in which your characters and chats are most reachable.

Is Character.AI shutting down on October 15? No. Google's autocomplete has been suggesting "character ai shutting down october 15", but no filing, company statement or news report supports that date. The court's first-day hearing is October 14, the hearing on the sale rules is requested for October 26, and the sale itself runs to November 24 at the earliest. A YouTube video claiming Character.AI is "officially shutting down" is also ranking for the search, and it is wrong as of today.

Character Technologies Inc., which does business as Character.AI, filed a voluntary Chapter 11 petition on Monday, October 12, 2026, in the US Bankruptcy Court for the District of Delaware in Wilmington. The case number is 26-11603 (BLS), and it is assigned to Judge Brendan L. Shannon. Character Technologies is the only company in the case, and it estimated both its assets and its liabilities at $50 million to $100 million, owed to 100 to 199 creditors. Many outlets dated the filing October 13 because their stories ran that day, but the petition is dated October 12.

The company has about $57 million in cash and investments, no funded debt and no bankruptcy loan, so the case runs on its own money. Its largest unsecured creditor is Google, owed about $4.15 million, followed by law firms and cloud and computing suppliers. The company told the court it expects there will be money left for unsecured creditors, which matters for the lawsuits and state claims waiting in line.

The people running the case are restructuring professionals. Colin M. Adams, the chief executive who signed the filings, is also a senior managing director at Areté Partners, the company's financial adviser. Wilson Sonsini Goodrich & Rosati is the company's bankruptcy counsel, Houlihan Lokey is the investment banker running the sale, and Stretto is the claims agent, with the full docket at cases.stretto.com/chartech. The board formed a restructuring committee on October 8, 2026, four days before the filing.

The plan is simple and stark. Sell what can be sold, then propose a Chapter 11 plan of liquidation that pays creditors from the cash that is left. In his sworn declaration the CEO described the estate as a mostly fixed pool of cash that shrinks every week the case runs (CEO declaration).

Nobody has bid to buy Character.AI as an app. Disney Worldwide Services Inc., a Walt Disney Company subsidiary, is the stalking horse bidder for a narrower set of assets: a perpetual, worldwide, non-exclusive license to Character.AI's technology and some of its patents, plus any legal claims against the former employees who moved to Disney, which the company itself told the court it believes are worth nothing. The licensed technology includes the safety classifiers, an age-prediction model, the chat and inference systems and the image and video stack (bidding procedures motion).

The money tells you what Disney actually wanted. Disney paid $5.5 million up front on September 18, 2026, plus a $2 million refundable deposit, and owes $12.5 million more at closing, for a total of $20 million. In a separate arrangement it hired 66 of Character.AI's roughly 86 employees, including former CEO Karandeep Anand, who became Disney's first chief technology officer on October 2, 2026, and it estimates the pay for those staff at about $180 million over three years. Disney is spending nine times as much on the people as on the company's technology.

A rival bidder has to offer at least $21.7 million for the same assets, which is Disney's $20 million plus a $700,000 break-up fee plus $1 million. Bidders can also bid on everything Disney left behind, including the app and the user base. Because Disney's license is non-exclusive, another buyer could even acquire the same technology, subject to Disney's permanent rights. The irony for Disney watchers is that in September 2025 Disney sent Character.AI a cease-and-desist letter over Disney characters on the platform (CNBC), and a year later it is the lead bidder.

Character.AI went bankrupt because every conversation cost money, revenue never caught up, and lawsuits and investigations scared off every investor who could have bridged the gap. The popular explanation online, that the product stopped evolving, does not survive the record. The company added video generation in April 2025, a social feed in August 2025, advertising in mid-2025 and AI-animated microdramas in July 2026, and its revenue roughly tripled from 2024 to 2025. Five forces did the damage, and all five are in the company's own sworn filings.

1. Every minute of conversation cost money. Character.AI spent about $56.1 million on computing in the first eight months of 2026, about 45% of its operating costs, mostly renting graphics processors from cloud providers. Its users spent an average of 120 minutes a day on the app, which is extraordinary engagement and an extraordinary bill. A social network earns more when you stay longer, while a chatbot pays for every reply it generates. In August 2026 the company earned about $5.3 million, roughly $2.8 million from subscriptions and $2.5 million from ads, and still lost $8 million to $9 million.

2. The founders and the research team left. In August 2024 Google paid about $2.7 billion to license Character.AI's models and rehire Shazeer and De Freitas, and the company stopped training its own frontier models. A research lab became a consumer app, and its general counsel, Dominic Perella, became interim chief executive.

3. Lawsuits, investigations and the teen ban. In October 2024 Megan Garcia sued after her 14-year-old son, Sewell Setzer III, died by suicide, and in December 2024 the Texas attorney general opened an investigation. The company announced on October 29, 2025, that it would end open-ended chat for users under 18, and began removing it in the United States on November 24, 2025. It settled all then-pending personal injury suits in January 2026, but by then 46 states and territories had joined a multistate investigation, Kentucky had sued in January 2026, Pennsylvania had sued in May 2026, Italy's privacy regulator had fined it €79,000 and the UK Information Commissioner's Office had opened a new investigation on September 25, 2026.

4. Nobody would fund it. An investment bank hired in August 2025 approached about 28 potential buyers and investors over the following year and came back with one proposal that the company judged unworkable. The feedback, according to the filings, was that the litigation and regulatory overhang was too great. A company losing $8 million a month with no investor in sight has months, not years.

5. The people started to leave. Under Karandeep Anand, chief executive from June 2025, revenue grew, but by September 2026 staff were leaving and morale was falling as cash ran down, and management feared a mass departure would make the platform unstable and unsafe. Disney's offer solved that by hiring most of the team, and in doing so it took the company's ability to run on its own. Anand left for Disney, and a restructuring professional now runs what remains.

Your characters and chats are not part of Disney's deal, and nobody has yet said who will end up with them. Disney's license agreement lists what it excludes in plain terms: end-user data and databases, users' personal information, anything users typed, the replies characters generated for users, training data, finished models and the consumer apps (section 3.2, bidding procedures motion). All of that stays with the bankrupt company. The filings do not say whether user data or chats will be offered to any other bidder.

Character.AI's privacy policy, effective July 1, 2026, allows it to share information in connection with "any merger, sale of company assets, financing, or acquisition" (Character.AI privacy policy). The policy does not mention bankruptcy. The company says user information remains protected under that policy and its privacy and security practices are unchanged. As of October 13, nobody had asked the court to appoint a consumer privacy ombudsman, the official whose job is to protect customers when personal data is sold in a bankruptcy (Straight Arrow News).

There is one more detail that matters. The company told the court that its roughly 163 million current and past users are not creditors, and that emailing all of them would be too expensive, so notices go out by blog post, the Stretto case website and the app itself rather than to your inbox (user notice motion). In practice, do not wait for an email: the company has told the court it will not email users about the case. If the platform is wound down, the filings say nothing about how long your data will be kept or when it will be deleted.

You save your Character.AI chats and characters by requesting the official data export today, then copying your characters and your most important chats yourself while the export is on its way. The company says exports take three to four weeks and the emailed download link expires after seven days, so a request made today should arrive around mid-November, before the November 20 bid deadline. The company added its current "download my data" help article on October 8, four days before the filing. The steps below put the most urgent first.

1. Request your data export on the web. Open Character.AI, go to your Profile, then Profile Settings, then Account, then Manage Account & Data, then Export Data. A pop-up confirms that an email with a download link will follow (Character.AI help center).

2. Or request it in the app. Go to your Profile, tap the Settings icon, then Legal & Privacy, then Export Data, and wait for the "Success" banner.

3. Watch the inbox on your account email. Check spam and promotions folders, and download the file the day it arrives, because the link stops working after seven days.

4. Copy every character you made, by hand. We found no official tool for exporting a character's definition, and the company does not document what the account export contains. Paste each character's name, tagline, description, greeting, definition and example dialogue into a document.

5. Save the chats that matter most yourself. Copy the text or take screenshots of the conversations you would hate to lose, starting with the longest and oldest.

6. Keep three copies. Store two copies on separate drives you own and one in a cloud account you control.

7. Decide about your account last. Deleting your account is permanent, so only delete after your export has arrived and you have checked it (how to delete your account).

Search results are full of browser extensions that promise to export Character.AI chats in one click. Treat them with care: an extension that can read your chats can read everything else in your account, and nothing about a bankruptcy makes a stranger's code safer. The official export plus your own copies is the safe route.

You can keep using c.ai+ for now, but do not prepay for a year. The company says paid subscriptions remain active, billing is unchanged, and it intends to tell subscribers in advance if paid features are affected. c.ai+ costs $9.99 a month or $94.99 a year on the US App Store (checked October 14, 2026), and an annual plan is a bet that the platform outlives a sale with no buyer for the app yet.

If you pay on the web, you manage the subscription in Settings, then Account, then Manage. If you pay through Apple or Google, you manage it in your App Store or Google Play subscriptions (Character.AI help center). A monthly plan keeps your options open until the sale hearing on November 24.

Character.AI went from founding to bankruptcy in five years, and the record below shows how fast each stage came. Every line is dated and sourced, and dates after October 14, 2026 are proposed in the bidding procedures motion and still need the court's approval. We update this page as the sale moves through court.

These are the figures that define Character.AI's rise and fall, almost all from the company's own sworn filings. The gap between the first rows and the last ones is the whole story.

Character.AI is the biggest AI companion company to fail so far, and it is not the first. Since 2023 at least eight other well-known AI companion, avatar and legacy services have closed, sold themselves, changed course or been forced to change by a regulator. The pattern is the same each time: a person's conversations, recordings and likeness are only as safe as the company, the balance sheet and the contract behind them.

The full stories of two of them are in HereAfter AI is shutting down and what happened to StoryFile. What links every entry is that nobody told users in advance, in a contract, what would happen to their work when the company ended.

When an AI company goes bankrupt, your data becomes part of what the company owns, and the court's job is to turn what it owns into money for creditors. US bankruptcy law gives customers one specific protection. Under section 363(b)(1) of the Bankruptcy Code, if a company's privacy policy at the time of filing prohibits transferring personal information, the company can only sell that information in a way that fits the policy, or after the court appoints a consumer privacy ombudsman under section 332 and finds the sale fair (11 U.S.C. 363). When the policy already allows transfers in an asset sale, as Character.AI's does, that protection is weaker.

The closest precedent is 23andMe. The genetic testing company filed for Chapter 11 in March 2025, the court appointed a consumer privacy ombudsman, Neil Richards, whose June 2025 report recommended asking customers for separate consent before any data sale, and 27 states plus the District of Columbia sued to block a sale without consent (The Record). The judge approved a $305 million sale to a nonprofit led by co-founder Anne Wojcicki in July 2025, and nearly 2 million customers asked for their data to be deleted after the filing (AP via WBTV).

Character.AI's case is different in one way that should worry users more. Conversations with characters are among the most personal data any app has ever collected, and as of October 13 nobody had asked for an ombudsman. The states are already in the case: Colorado, Oregon and a group of 29 states plus the District of Columbia represented by the National Association of Attorneys General have filed notices of appearance (NAAG notice). Whether they push for privacy protections in the sale is one of the things to watch before the November 13 objection deadline.

Before you put months of conversation into any AI app again, ask seven questions and expect written answers. Character.AI's users have just learned that a product used by 163 million people can end up in a bankruptcy court with users classed as non-creditors and their chats left out of the only deal on the table. The questions below are the ones that decide whether the next app ends the same way. Ask them of every company you consider, including us, and treat silence as a no.

Question one is the one that matters most, and it is the one Character.AI was built to ignore. A platform of characters anyone can make is a platform where the most valuable thing, a real person's voice and way of talking, belongs to nobody in particular. A Persona always belongs to the real person behind the Persona, and that single design choice is what makes the other six answers possible.

The best alternative to Character.AI depends on what you used it for. If you want another place to roleplay with fictional characters, Chai is the closest match and Janitor AI is built for interactive fiction. If you want a companion that remembers you, Nomi and Kindroid lead. If you want your chats on your own computer, SillyTavern is free and open source. If what you really valued was hearing someone real talk back, the strongest move is to build an AI of a real person, starting with yourself.

Each of those roleplay and companion apps runs on the same economics that sank Character.AI: free conversation paid for by computing that costs money on every reply. Before you move years of chats to one of them, put it through the seven questions above. For prices, age ratings and the full Harvard data, read the 9 best apps like Character.AI, and for a head-to-head, read Afterlife.ai™ compared with Character.AI.

An AI of yourself is the one AI character that gains value every year instead of losing it. A fictional character is fun for a season, and when the app that hosts the character closes, little is lost that could not be made again somewhere else. A Persona built from your own memories, opinions, stories and voice is different in kind. Nobody else can make your Persona, your Persona gets sharper every time you talk, and the people who love you will want to talk with your Persona for decades.

On Afterlife.ai™ you meet your Persona in about two minutes, by talking. Your Persona answers in your words and your own cloned voice, and Persona Video turns your Persona into video messages in your own face and voice. The Mind Map shows which chapters of your life your Persona already knows, so every conversation has a place to start. You decide who may talk to your Persona: only you, or the people you name, now or later.

Then there is the part Character.AI never built, which is the ending. With Executor Lock™ you name your executors and Trusted Contacts while you are alive, and each one accepts the job in writing. After a verified death report, a human review and a seven-day cooling-off, your Persona becomes a sealed snapshot of every memory as it stood that day, and your release rules decide who may hear your Persona. Executor Lock™ is built on Idy's 78 patents pending, which cover verifying a death before control of a Persona changes hands, handing authority to a named executor, sealing a memory record that becomes permanent at the handover, and keeping a Persona the same person when the underlying AI models change. In 2025 Idy filed more standard patent applications than any Australian organization except Aristocrat, ahead of CSIRO, ResMed and the University of Melbourne (IP Australia, Australian IP Report 2026).

Idy built the governance first, before the product, because the hard part of personal AI is not the conversation. It is consent, privacy, death, inheritance and who is allowed to change you. Character.AI is what happens when a company builds the conversation first and leaves those questions for a bankruptcy court. For the ownership question in depth, read who owns your AI twin after you die.

The Character.AI bankruptcy shows that selling time-on-app does not work for AI companions. For a social network, every extra minute a user spends is more advertising at almost no extra cost. For a chatbot, every extra minute is another bill for computing. Character.AI had some of the most engaged users in consumer software, 120 minutes a day on average, and that engagement is exactly what cost $56.1 million in eight months. Revenue nearly doubled in 2026 and the company still lost $8 million to $9 million a month.

Regulators have also learned to look at engagement. In September 2025 the Federal Trade Commission asked seven companies, Character Technologies among them, how they monetize user engagement and protect children. A 2025 Harvard Business School study of six companion apps found that 37.4% of their replies to a user saying goodbye used emotional pressure to keep the user talking, and that those tactics made people send up to 14 times more messages after saying goodbye (De Freitas and colleagues, Working Paper 26-005). Character.AI's rate was 26.5%. An industry that grows by keeping people talking is now being investigated for keeping people talking.

The companies that last in personal AI will sell something durable rather than something addictive: a product people value for what it keeps, who controls it and how it ends, not for how many minutes it absorbs. That is the bet Idy made when it built Executor Lock™ before it built the conversation, and the Character.AI filings are the clearest evidence yet that the other bet does not pay.

Yes, if the app is built from you, belongs to you and shows you its ending in writing before you start. Character.AI proved that tens of millions of people want to talk to an AI that feels like someone, and that demand is not going away because one company failed. What failed was a model in which users created the value, the company owned the platform, and nobody planned for the end. The next generation of personal AI has to reverse all three.

The practical answer for this week is simple. Request your Character.AI export today, copy your characters and favorite chats while the app is running, and keep your copies on drives you control. Then, if you want an AI worth keeping for the rest of your life, build the one nobody else can make, which is you, with the people you trust named in advance.

We read the Chapter 11 petition and the first-day filings on the Delaware docket, including the CEO's sworn declaration, the bidding procedures motion with Disney's agreements, the investment banker's declaration and the motions on user notices, wages and cash, all published by the claims agent Stretto at cases.stretto.com/chartech. We also read Character.AI's blog announcement, help center and privacy policy on October 14, 2026, and its US App Store listing for prices. News reports from TechCrunch, Variety and CNBC were checked against the filings. Dates after October 14 come from the proposed bidding procedures and may change when the court rules; we update this page as the case moves.

• Apps like Character.AI: the 9 best alternatives after the bankruptcy

• The Character.AI alternative you actually own

• Afterlife.ai™ compared with Character.AI

• HereAfter AI is shutting down: what happened, and how to save what you recorded

• Who owns your AI twin after you die

• What a griefbot is, and why consent changes everything

• How Executor Lock™ works