Judge Clears Character.AI Auction With Disney as Stalking Horse
A Delaware bankruptcy judge approved sale procedures on October 30 and pressed the AI companion company to appoint a consumer privacy ombudsperson.
A Delaware bankruptcy judge on October 30 approved bidding procedures for the sale of Character Technologies, the company behind Character.AI, with Disney's $20 million offer as the stalking horse bid, Law360 reported. The judge also strongly encouraged the company to appoint a consumer privacy ombudsperson, according to the report.
Character.ai filed for Chapter 11 on October 12 to run what it called a value-maximizing sale process. Ahead of the hearing, California and other states objected to parts of the proposed bidding rules, arguing that other buyers should have a fair shot. The approved procedures move the case toward an auction in which rival bidders can try to top Disney's offer.
The case is In re Character Technologies, Inc., No. 26-11603, in the U.S. Bankruptcy Court for the District of Delaware.
Why it matters: User data is the most sensitive asset in any companion or dating company sale. A judge pressing for a privacy ombudsperson in an AI companion case shows that courts and state regulators will not treat chat histories and personal data as ordinary assets that pass to the highest bidder. Any operator that might one day sell, merge or wind down should make sure its privacy policy says clearly what happens to member data in a change of control, because that language will be read closely if it ever comes to a courtroom.
Sources: Law360: Character.AI Ch. 11 auction with Disney bid moves forward, October 30, 2026 · Character.ai Chapter 11 announcement (Business Wire), October 12, 2026
Key takeaways
- 01A Delaware bankruptcy judge approved Character.AI's bidding procedures on October 30.
- 02Disney's $20 million offer is the stalking horse bid that rivals must top at auction.
- 03The judge strongly encouraged the company to appoint a consumer privacy ombudsperson.
- 04States had objected to the proposed bidding rules ahead of the hearing.
Reviewed by an operator. Last updated November 4, 2026. High Intent is led by founder and CEO Bill Alena, backed by a team of industry experts with over 100 years of online dating experience between them.
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