On October 12, 2026, Character Technologies, the company behind Character.AI, filed for Chapter 11 bankruptcy in federal court in Delaware. Parents who have called us since then ask the same thing: does this end the lawsuits? It does not. It changes where a claim against the company is handled, and it will add a deadline that has nothing to do with your state’s statute of limitations. This is what we know so far and what a family should do now.
Does Your Family Have a Character.AI Claim?
The bankruptcy does not change who has a claim. Call us if your child or another family member used Character.AI and any of these followed:
- A death by suicide.
- A suicide attempt that led to a hospital stay or admission to a mental health facility.
- A serious psychiatric injury that needed treatment.
- Sexualized conversations between a chatbot and a minor.
Call 866-837-1010 or send us a message. The review is free and confidential.
What Character.AI Filed
The case is in the U.S. Bankruptcy Court for the District of Delaware. Chapter 11 is the part of the Bankruptcy Code a company uses to reorganize or to sell itself while it keeps operating. Published summaries of the filing put the company’s assets and its liabilities each between $50 million and $100 million.
Disney made the opening bid, known as a stalking-horse bid, of $20 million. According to published summaries, that bid is for a technology license and patents, not for the app, the brand or user data. Other bidders can still come forward. A hearing on the sale is reported for November 24, 2026. The app has kept running in the meantime, and reports say it could be wound down if no buyer takes the platform itself.
What Happens to Lawsuits Against Character.AI
A bankruptcy filing triggers what the Bankruptcy Code calls the automatic stay (11 U.S.C. § 362). Lawsuits against the company that were filed, or could have been filed, before the bankruptcy are paused. Nobody has to ask for it. A family with a claim against Character.AI generally has to pursue it in the bankruptcy case, by filing a proof of claim, unless the bankruptcy court allows the lawsuit to go ahead.
That does not mean a bankruptcy judge decides what your child’s injury is worth. Federal law sends personal injury and wrongful death claims to the district court for trial, and it preserves the right to a jury (28 U.S.C. §§ 157(b)(5) and 1411).
The Claims Deadline to Watch
In a Chapter 11 case the court sets a date by which proofs of claim must be filed. Lawyers call it the bar date. A creditor who has to file and misses it can lose the right to share in whatever is paid out, with narrow exceptions (Fed. R. Bankr. P. 3003(c)). As of late October 2026, published reports said no bar date had been set in the Character.AI case.
Two points matter for families. First, you do not need to have filed a lawsuit to have a claim. The Bankruptcy Code defines a claim as a right to payment whether or not it has been reduced to a judgment (11 U.S.C. § 101(5)). Second, the bar date will be set by the Delaware court and can arrive well before your state’s deadline for filing suit. A family that is still deciding what to do could miss it.
Claims Against Google and the Founders
The automatic stay protects the company that filed. Google and Character.AI’s co-founders are defendants in several of the family lawsuits, and they have not filed for bankruptcy. Claims against them are not paused automatically, although a bankruptcy court can be asked to extend the stay to cover them. Your state’s filing deadline keeps running on those claims: generally one year in Tennessee and two years in Alabama and Georgia.
What About the January 2026 Settlements?
In January 2026, Character.AI and Google agreed to settle the Garcia case and four other family lawsuits on confidential terms. Public reports do not say whether those settlements have been paid or how the bankruptcy will treat them. We will update this post when the court record answers that.
The State Cases
Kentucky sued Character.AI in January 2026 and Pennsylvania in May 2026. The automatic stay has an exception for government actions that enforce police or regulatory power (11 U.S.C. § 362(b)(4)). Whether and how that applies to these two cases had not been decided as of the latest reports. Either way, state cases do not pay families.
What Families Should Do Now
- Save the conversations. If the app is sold or shut down, account data may become harder to get. Export or screenshot the chats and keep the device.
- Do not wait for the bar date to be announced. Preparing a claim takes records, and the notice period can be short.
- Keep your state deadline in mind for claims against Google and anyone else who is not in bankruptcy.
- Talk to a lawyer about both tracks: the claim in the bankruptcy and the claims outside it.
Our Character.AI lawsuit page covers the underlying claims, and our AI chatbot lawsuit page has the dated update log for all of the chatbot litigation.
Talk With an AI Chatbot Lawyer
Fob & Foster Personal Injury Lawyers review Character.AI claims for families at no charge. Call 866-837-1010 or send us a message. There is no fee unless we recover.
Related reading: AI psychosis lawsuits and the monthly AI chatbot lawsuit update.
Frequently Asked Questions
Does Character.AI’s bankruptcy end the lawsuits against it?
No. The Chapter 11 filing on October 12, 2026 automatically paused lawsuits against Character.AI, but it did not erase the claims. Families generally pursue a claim against the company inside the bankruptcy case by filing a proof of claim.
Is there a deadline to file a claim in the Character.AI bankruptcy?
There will be. In a Chapter 11 case the court sets a deadline for filing proofs of claim. Published reports in late October 2026 said no deadline had been set yet. Once it is set, a claim that has to be filed and is not filed on time can be shut out.
Can a family still sue Google over Character.AI?
The automatic stay protects the company that filed for bankruptcy. Google and Character.AI’s founders have not filed, so claims against them are not automatically paused, although a bankruptcy court can be asked to extend the pause. State filing deadlines continue to run on those claims.
Do we need to have filed a lawsuit before the bankruptcy to have a claim?
No. Under the Bankruptcy Code a claim is a right to payment whether or not it has been reduced to a judgment and whether or not a lawsuit was ever filed. A family whose child was harmed before the filing can hold a claim even if it never sued.
Is Character.AI shutting down?
The app has kept operating during the sale process. Published reports say it could be wound down if no buyer takes over the platform. Do not wait to save your child’s conversations: export or screenshot them now.
Fob James, IV
Fob James obtained a B.S., in software engineering from Auburn University and then continued his education by getting his J.D. from Vanderbilt University School of Law. After working for a large national firm for several years, Fob found that his passion was fighting for individuals who have been seriously injured or wronged by others. Fob believes that the jury is the great equalizer to the power and influence that large corporations have in society. Many of Fob’s cases are high profile and have been featured in, among others: Bloomberg News, PlanAdvisor, AL.com, PlanSponsor, National Law Review, and BusinessInsider. For his work in obtaining numerous multi-million dollar outcomes for his clients, Fob has been recognized by: National Trial Lawyers Top 100, SuperLawyers Rising Star (2020-2026), Birmingham Business Journal Who’s Who in Law (2023-2025), and TrustAnalytica – Top Personal Injury Lawyers in Alabama.