Character Technologies Updates Chapter 11 Sale Process
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Character Technologies’ Chapter 11 sale process advances with court-approved bidding procedures and Disney as a stalking-horse bidder.
Character Technologies, Inc., the operator of Character.ai, has provided an update on its ongoing Chapter 11 bankruptcy proceedings. On November 4, 2026, the U.S. Bankruptcy Court for the District of Delaware approved bidding procedures for the company’s asset-sale process. The court’s order, identified as Docket No. 106, also approved a transaction notice containing key details about the sale process.
Bidding Procedures and Stalking-Horse Agreement
The approved bidding procedures establish a framework for the sale, licensing, or disposal of substantially all of Character Technologies’ assets under section 363 of the U.S. Bankruptcy Code. The company has designated Disney Worldwide Services, Inc. as the stalking-horse bidder for a $20 million technology-license transaction involving specific assets referred to as the “Disney Target Assets.” The agreement includes a $700,000 break-up fee and sets a minimum competing bid of $21.7 million for these assets. Additional stalking-horse purchasers may be designated for other assets, subject to higher or better offers.
Key Deadlines and Auction Details
Interested bidders must submit offers by November 24, 2026, at 12:00 p.m. Eastern Time. Objections to the sale, excluding contract-related objections, must be filed by November 18, 2026, at 4:00 p.m. Eastern Time. An auction for the assets is scheduled for December 1, 2026, at 10:00 a.m. Eastern Time, with the location to be determined by the debtor. The results of the auction will be followed by a sale hearing on December 3 and 4, 2026, to finalize the transaction.
Access to Documents and Further Information
Documents related to the sale process, including the bidding procedures order and the stalking-horse agreement, are available on the case website managed by Stretto, Inc. (https://cases.stretto.com/chartech). Interested parties can also contact the company’s proposed investment banker, Houlihan Lokey, or its legal counsel, Wilson Sonsini Goodrich & Rosati, for further details.
The court-supervised process aims to maximize value for creditors while ensuring compliance with the approved procedures. The involvement of Disney as a stalking-horse bidder highlights significant interest in Character Technologies’ assets, though the final outcome will depend on the results of the auction and subsequent court approvals.
