AI entertainment platform Character.ai has filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware to pursue a sale of its assets.
The California-based company said in a Tuesday statement that it initiated the process to "maximize value" for its stakeholders.
Prior to the filing, the company said Disney Worldwide Services has agreed to offer $20 million and transition services as the stalking-horse bidder for a non-exclusive perpetual license to certain IP and claims.
Under the company's proposed timeline, it expects to complete the sale process in late November or early December.
"After a comprehensive review of the available alternatives, the board determined that this court-supervised sale process provides the Company with the best opportunity to maximize value for all stakeholders," Colin Adams, CEO of Character.ai, said in the statement.
Character Technologies, which runs the AI platform, listed both assets and liabilities in the range of $50 million to $100 million, according to its court filing.
The company said it expects to continue operating during the sale process. However, if the process fails to secure a buyer, the platform will be wound down, according to the statement.
Founded in late 2021, Character.ai operates an AI entertainment platform that lets users create and chat with customizable AI characters and companions. Last month, it rolled out two new chat styles: PipSqueak 3, a step up for general roleplay, and ShortSqueak, a style for quick, casual chats.
"As we navigate this process, maintaining a safe and engaging experience for our community remains a top priority," the company said in a separate blog post.