Character.AI Bankruptcy: What Happens to Your Characters?

TL;DR: Character.AI filed for Chapter 11 bankruptcy and is selling its assets. The app is still online, and your chats and characters are still there for now. If the sale does not produce a buyer who keeps the app running, it will be wound down. Character.AI's data export can take 3 to 4 weeks to arrive, so request it today.

We run Neocortex, a platform for building AI characters, so we have been following this closely. Below is what happened, what it means for the characters you spent months writing, and the steps we would take today as a Character.AI user. We will update this post when the sale result is announced.

Did Character.AI file for bankruptcy?

Yes. Character Technologies, the company behind Character.AI, filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware. The news broke the next day (CBS News, CNN, NBC News).

Two pressures came together. The service cost far more to run than it earned, with reported losses of more than $8 million a month. And the company has faced a series of lawsuits from families alleging the platform exposed children to harmful content, including cases connected to teen suicides. Character.AI settled several of those cases earlier in the year, and state investigations continued.

Chapter 11 is not an instant shutdown. It lets a company keep operating while a court oversees the sale of its assets, and that detail matters a lot for users.

The timeline so far

The proposed dates depend on the court approving the bidding procedures, so they can still move (Tech Times).

Is Character.AI shutting down?

Not immediately, but it might.

• The app is still running. The company plans to keep the service online during the case, and says it will tell subscribers in advance if paid features change.
• There is an auction. Other buyers can bid for the company's assets on the schedule above.
• No buyer, no app. The company has said that if the process does not produce a buyer willing to keep operating the platform, the consumer service will be wound down.

So "is Character.AI shutting down?" depends on who shows up at the auction. That uncertainty is exactly why you should back up now rather than in December.

What is Disney buying?

Disney is the "stalking-horse" bidder, meaning it set the opening offer of $20 million that others must beat. But Disney is bidding for a non-exclusive, perpetual license to certain Character.AI intellectual property and legal claims. A later court filing also shows Disney agreeing to offer jobs to at least 60 Character.AI employees, most of the company's workforce (TechCrunch).

That is not a purchase of the Character.AI app. And in court, the company's attorney said no buyer had yet made an offer for the company's user data or its operating chatbot business (The Star, reporting Reuters).

In other words, even if Disney wins, it is not taking over the app you use, and it is not taking your characters with it (NBC News, Tom's Guide).

What happens to your chats and characters?

Right now, nothing. You can still log in, chat and edit your characters, and paid subscriptions stay active.

But your data is part of the picture. Character.AI's privacy policy allows the data it collects, including chat transcripts, to be disclosed in connection with a sale (CBS News). A coalition of 40 attorneys general has asked the court for conditions on any sale, including a meaningful chance for users to delete their data before it is sold (Tech Times). These are requests; the judge decides what any sale must include.

The problem is what comes after. No buyer has committed to keeping user-created characters or old conversations, and if the platform is wound down, there is no promise your data will stay accessible. Three realistic outcomes:

1. A buyer keeps the app running. Your characters probably survive, but the new owner can change features, pricing and content rules.
2. The app shuts down. Your chats and characters are gone unless you saved them yourself.
3. Something in between. The app keeps running for a while under a new owner who later changes direction.

In every scenario, having your own backup costs you nothing and protects months of work.

What to do this week

The full walkthrough, with a copy-paste template for each character, is in our guide on how to back up and move your Character.AI characters. The short version:

1. Request the official data export from your Character.AI account settings. Character.AI says it can take 3 to 4 weeks and arrives as an emailed link that works for 7 days. Requested today, it lands around the time of the auction.
2. Save each character's definition by hand. Copy the name, description, greeting and definition of every character you made into a text file. The export is a data dump, not a character file you can import somewhere else.
3. Save the chats you care about. Copy them into a document, or print them to PDF.
4. Pick a new home for your characters before you need one.

Where are Character.AI users going?

People are looking at a mix of companion apps and character platforms. Which one fits depends on what you used Character.AI for: chatting with community bots, long-term companionship, or creating your own characters. We compared the main options, including where Neocortex is not the fit, in the best Character.AI alternative in 2026.

If you are a creator, here is our pitch in one paragraph. Neocortex lets you rebuild your character with a backstory, world, personality, emotions and knowledge files. You can give it a real voice (preset or cloned), share it with friends through a public link, and put it in your own game, website or Discord bot through our API. Most importantly, the Terms of Service say the content you create is yours, and you can export it whenever you want. If you want to go further, see how to make your own AI character with voice and an API.

The lesson from Character.AI

Character.AI made AI characters mainstream. Millions of people wrote stories, built companions and spent real hours with characters they created. All of it lived on one company's servers, under one company's rules, with no way to take it with you.

Whatever platform you pick next, check three things before you invest months in it:

• Can you export your characters in a usable form?
• Who owns what you create? Read the terms.
• Can you use your characters outside the app?

If the answer to any of those is no, you are one bad quarter away from going through this again. On Neocortex, all three answers are yes.

Neocortex is not affiliated with Character.AI or Character Technologies, Inc. Facts in this article come from the cited news reports and were checked in October 2026.

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