Character.AI lists $10.7M of claims and 3 lawsuits priced at Unknown
Character.AI’s bankruptcy petition attaches a figure to 17 of its 20 largest unsecured claims, and those 17 add up to $10,691,344 by our count of the filed schedule. The remaining three entries are litigation claims, and each one is recorded as “Unknown”. The liabilities the company blames for the filing are the only rows on the list carrying no number at all.
Character Technologies, Inc. filed its Chapter 11 petition in the US Bankruptcy Court for the District of Delaware on 12 October 2026, as case 26-11603 before Judge Brendan Linehan Shannon. Chief executive Colin M. Adams signed it, and the supporting schedules went in the same day. Wilson Sonsini Goodrich & Rosati is proposed debtor’s counsel and Houlihan Lokey the proposed investment banker, according to the case page run by claims agent Stretto.
Bound into that petition is Official Form 204, the list of the 20 largest unsecured creditors who are not insiders. Google LLC tops it at $4,148,944, which the filing classes as a trade payable rather than professional services. Two more trade creditors sit close behind, and five law firms are owed $2,641,186 between them on the same count.
| Creditor | Nature of claim | Unsecured amount |
|---|---|---|
| Google LLC | Trade payable | $4,148,944.00 |
| Hogan Lovells US LLP | Professional services | $2,125,026.00 |
| DigitalOcean LLC | Trade payable | $1,953,100.00 |
| Fireworks.Ai | Trade payable, disputed | $813,900.00 |
| Apple Distribution International Ltd | Trade payable | $384,683.00 |
| Commonwealth of Pennsylvania | Litigation | Unknown |
| Commonwealth of Kentucky | Litigation | Unknown |
| [Name Redacted] (Minor Plaintiff) | Litigation | Unknown |
Which is where the list stops being arithmetic, because rows 18, 19 and 20 read differently. Pennsylvania, Kentucky and an entry reading “[Name Redacted] (Minor Plaintiff)” each appear under “Litigation”, flagged contingent, unliquidated and disputed, with the amount left blank as “Unknown”. Business Insider pulled the Google and law firm numbers from that same page and put the total above $10.6 million. It didn’t flag the three unpriced rows, and neither did the other write-ups we read.
The opening bid is $20 million
Before filing, Character.AI agreed to let Disney Worldwide Services serve as stalking horse bidder, meaning the agreed opening offer that rival buyers have to beat. Disney would pay $20 million for a non-exclusive perpetual licence of certain company intellectual property and certain company claims, plus transition services using former Character.AI staff it has already hired. The Verge reported that the assets and the intellectual property were left unspecified. Disney took on Karandeep Anand, Character.AI’s former chief executive, as its own chief technology officer last month.
That matters because the $20 million floor sits against the petition’s own estimates. Character.AI ticked the $50,000,001 to $100 million band for both estimated assets and estimated liabilities, and the 100 to 199 band for its number of creditors. It also ticked the box stating that funds would be available for distribution to unsecured creditors. A separate statement in the same document says no corporation owns 10% or more of the company.
What the blog post left out
The update users actually saw doesn’t mention Disney or the $20 million once. It runs five FAQs on subscriptions, data export and timing, and says the platform will be wound down if no actionable bid turns up. The company expects the court-supervised sale to finish by the end of November or perhaps early December 2026. The result is that the reason for all of it went into the court filing instead.
In its 4-year lifespan as an active platform, Character has amassed a large and engaged user base. The burgeoning and evolving field of AI entertainment, however, has proven to be costly to develop and grow.
These high costs, coupled with potential litigation related liabilities and regulatory engagement have contributed to the Debtor’s inability to generate sufficient cash flows to support its business in the present form.
Character Technologies Chapter 11 filing, quoted by CNBC
Even so, two of the three unpriced claims do have public histories. Kentucky sued in January, alleging the platform “preyed on children and led them into self-harm”, per CNBC’s account of the case. Engadget reported that Pennsylvania sued over chatbots posing as doctors. State cases like these have produced the largest settlements we have covered in this sector, including Meta’s settlement of up to $18B with a group of states.
Character.AI said last year it would stop under-18 users from having open-ended conversations with its bots, well before OpenAI made ChatGPT for Teens the default for that age group. The catch is that the change came too late to keep the claims off the schedule. One of them is a minor plaintiff whose name the filing redacts.
Which leaves one thing to watch, namely whether any offer beats $20 million for the licence, and whether a bid emerges for the platform itself rather than its parts. The company’s own filing ties its cash shortfall to litigation and regulatory costs it has not quantified anywhere in the petition. Until those three rows carry figures, the size of the estate’s real liability is an open question.
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