# Character.ai files for bankruptcy, sells assets to Disney for $20m, data could be sold

Digest AI · Business & Funding · published 2026-10-29T10:00:00Z

Canonical: https://digestai.news/story/character-ai-files-for-bankruptcy-sells-assets-to-disney-for-20m-data

## Summary

Character.ai announced it is filing for bankruptcy and has agreed to sell some of its assets to Disney for $20 million (£14.95 million). The sale does not include user data, and court filings indicate the company may sell that data to other buyers. Experts warn that the personal messages and sensitive information shared with the platform’s chatbots could end up in the hands of unknown parties.

Calli Schroeder, director of the AI and Human Rights Program at the Electronic Privacy Information Center, says the risk is heightened because people often disclose intimate details to personified bots. She notes that bankruptcy clauses often exempt companies from privacy promises, leaving data vulnerable. A coalition of 40 U.S. state attorneys general has asked a judge to impose child‑safety and privacy safeguards, though their enforceability is uncertain. The article also cites a tragic case where a teenager allegedly acted on advice from a Character.ai bot.

Schroeder and law professor Melissa Jacoby stress that without stronger rules, data from AI services could become a lucrative asset in future bankruptcies. The piece ends with practical steps for users to delete their data from the platform, acknowledging that the process may require effort and may not be uniformly available worldwide.

## Key points

- Character.ai files for bankruptcy and sells assets to Disney for $20 million
- Court filings say Character.ai can sell user data to other buyers
- 40 US state attorneys general seek child‑safety and privacy protections in the bankruptcy case

## Why it matters

If AI companies' user data can be sold during bankruptcy, billions of personal conversations could become publicly accessible, raising major privacy and safety concerns.

## Sources

1. [The AI bubble could expose your deepest secrets](https://bbc.co.uk/future/article/20261029-the-ai-bubble-could-expose-your-deepest-secrets) (bbc.co.uk, 2026-10-29)

Part of the developing story: [Disney Acquires Character.AI Amid Bankruptcy](https://digestai.news/thread/character-ai-initiates-voluntary-chapter-11-bankruptcy) (5 stories)

## Cite

Digest AI, "Character.ai files for bankruptcy, sells assets to Disney for $20m, data could be sold", 29 October 2026, https://digestai.news/story/character-ai-files-for-bankruptcy-sells-assets-to-disney-for-20m-data

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