Character.AI Is Up for Sale: What Happens to Your Chats

Character.AI, one of the most used AI chatbot platforms, filed for Chapter 11 bankruptcy protection on October 12, 2026. The company says the filing is meant to run a court-supervised sale of the business. The app is still running. What happens to the conversations millions of people have stored there is the open question.

What the company has said

The company told the press that it filed because of legal, regulatory and operational pressure. It has faced several lawsuits. Wrongful death cases involving Google, which had a licensing deal with the company, were settled earlier in 2026, and Kentucky and Pennsylvania have sued the company this year. Engadget reported liabilities in the range of $50 million to $100 million and noted that the company lost key talent to Google.

Disney is the lead bidder. According to CBS News, Disney agreed to pay $20 million for a non-exclusive, perpetual license to Character.AI's intellectual property. A license is a different thing from buying the company. Other buyers can still bid for the rest, and Engadget describes Disney's offer as the baseline that competing bids have to beat. The company expects the sale process to close in late November or early December.

How the sale works

A Chapter 11 sale runs as an auction. The company picks an opening bidder, called a stalking horse, whose offer sets the floor, and other parties can then bid above it. Disney holds that position here. Because its offer covers a license to intellectual property and not the app, the platform itself, with its accounts and chat history, is a separate asset that someone else could buy or that could be shut down. CEO Colin Adams said the board chose a sale because it offered the best chance to maximize value for all stakeholders, and added that a safe and engaging experience for the community remains a priority.

That framing matters for users. In a sale, the chat history is a business asset like any other, and it is governed by the company's privacy policy, not by anything the users agreed to when they wrote the messages. People often assume a chatbot conversation is closer to a private diary than to a database row. Under the company's policy, in this case, it is closer to the database row.

What it means for your account

Subscriptions stay active for now, and the company says it will notify subscribers ahead of time if paid features change. If no buyer takes the platform, it can be shut down.

The data question deserves the most attention. Under the company's privacy policy, chat transcripts, voice recordings, images and videos can be disclosed in connection with a sale. That does not mean a buyer will get everything, and the reporting so far names no buyer for the app itself. The policy does allow the transfer, so anyone who stored private or sensitive conversations on the platform should treat the data as exposed to a sale until they hear otherwise.

What to do this week

Users can export their data or delete their account from the app or the website. The order matters. An export can take a while to arrive, and deleting an account before the file shows up removes the thing you wanted to save. Request the export first, wait for it, and delete afterward if you decide to leave.

Characters you built are worth saving by hand. Copy the name, the greeting, the description and the definition into a text file, since an export may not include them in a form you can reuse. If you pay through the App Store or Google Play, the subscription is managed there, and a prepaid annual plan is a poor bet while the sale is pending. A step-by-step export guide with the sale dates is on the Nika blog.

Where people are going

Alternatives are the other half of the story. Chai, Talkie and Janitor AI offer a similar browse-and-chat experience. Nomi and Kindroid appeal to people who care most about long-term memory and voice. Nika is an AI companion app that runs on Android, in the browser and in Telegram and starts free for adults. It has far fewer ready-made characters than Character.AI, and its focus is memory you can read and edit. If you switch, check what any new service stores about you and whether you can delete it. That question is the one the Character.AI sale turned from theoretical into urgent.