40 US AGs Demand Safety Conditions for Character.AI Sale in Bankruptcy

A coalition of 40 state attorneys general filed a notice in Delaware bankruptcy court requiring nine binding safety and privacy conditions before any buyer acquires Character.AI's app or the chat logs of 21.6 million users. The company filed Chapter 11 on October 13, 2026, listing $50–100 million in assets and liabilities; Walt Disney is the $20 million stalking-horse bidder, excluding the app, brand and user data.

• 40 AGs demand nine conditions before sale of data from 21.6 million users
• Character.AI filed Chapter 11 on October 13, 2026, with $50–100 million in assets and liabilities
• Walt Disney is stalking-horse bidder at $20 million, excluding app and chat logs
• Conditions include age assurance, minor protections and crisis safeguards