40 state attorneys general file notice of interest in Character.AI's Chapter 11 case, seeking data and child-safety protections in any asset sale

A bipartisan group of 40 state attorneys general, led by New York AG Letitia James, filed a notice of interest in Character.AI's Chapter 11 case. The company announced the bankruptcy on Tuesday, alongside a sale of some assets to Disney. The AGs say regulatory issues must be addressed in any sale. They urge the judge to require the buyer to put in place age assurance, limits on minors' use, crisis safeguards and deletion of user data. The filing also disclosed a multi-state investigation opened in 2024, which had not reached a settlement before the bankruptcy. The extraction lists no primary document links, so the filing's exact wording is not checked here.

The main question is whether chat logs, many from minors, can pass to a buyer as an ordinary asset. A notice of interest is not a ruling, but it signals that regulators will contest any sale that ignores child safety and privacy. Any bidder, including Disney, may face conditions or delays, and that could affect the price. Other AI companions and chatbot firms should note that state AGs are working together on this, and that insolvency does not remove their scrutiny. The practical effect is uncertain until the judge responds.

The claim that private chats could be sold to the highest bidder without protections is an advocacy framing, not a described outcome. No sale terms covering user data have been shown, and the Disney deal is described only as a sale of some assets. The listed harms (chatbots posing as licensed professionals, sexual and violent content, weak age checks) are the AGs' allegations from their investigation, not findings. The filing asks for conditions and does not impose any.

1. 01Whether the bankruptcy judge adopts any of the AGs' requested conditions (age assurance, minors' restrictions, crisis safeguards, data deletion) in sale or bid-procedure orders.
2. 02Whether the Disney sale terms reveal if user chat data and models are included, and whether Disney or other bidders commit to the requested protections or to deleting data.
3. 03Whether the 2024 multi-state investigation ends in a settlement, formal claims in the bankruptcy, or lawsuits, and whether other AGs or the FTC join the filing.