# 40 State AGs Demand Child Data Protections in Character.AI Bankruptcy > 40 state attorneys general push for child data safeguards as Character.AI files for bankruptcy. - Title: 40 State AGs Demand Child Data Protections in Character.AI… - Summary: 40 state attorneys general push for child data safeguards as Character.AI files for bankruptcy. 40 state attorneys general require buyers of Character.AI to… - Keywords: character ai, state ags, delaware bankruptcy court, child data privacy, disney license, chapter 11, ai chatbots, user data sale, finance, markets, State, AGs - Source: BigGo Finance — https://finance.biggo.com/news/29e8ca5b-f59c-431e-ade9-776e23723e55 - Author: BigGo Finance - Published: 2026-10-14T21:35:19+00:00 - Read time: 1 min - Topics: character ai, state ags, delaware bankruptcy court, child data privacy, disney license, chapter 11, ai chatbots, user data sale, finance, markets ## 40 State AGs Push Bankruptcy Court A coalition of 40 state attorneys general urges Delaware bankruptcy judge to require safeguards on children's chat data during Character.AI's Chapter 11 sale process. > this company has collected some of the most private thoughts children have ever shared, and now those conversations could be sold off to the highest bidder ## New York AG Leads Coalition New York Attorney General Letitia James demands any buyer implement age-assurance systems, restrict minor access, establish crisis safeguards, and allow data deletion. > i am fighting to make sure any buyer puts children's safety first and puts real protections in place ## Character.AI Files Bankruptcy Character.AI filed for Chapter 11 citing monthly losses of $8 million to $9 million and a $20 million Disney licensing deal. > character ai filed for chapter 11 protection late monday ## No Buyer for User Data Character.AI's attorney states no buyer has yet bid on user data or the chatbot business despite Disney's $20 million license deal. > no bidder has yet made an offer for its user data or the operating chatbot business ## States' Legal Concerns States allege chatbots impersonated licensed medical professionals and exposed children to sexualized and abusive interactions. > the investigations uncovered exceptionally serious dangers and potentially unlawful conduct from character ai particularly its treatment of children ## Disney Deal Details Disney's $20 million transaction covers non-exclusive perpetual license to intellectual property and hiring most Character.AI staff. > disney's proposed twenty million dollar transaction covers only a non-exclusive perpetual license to certain intellectual property ## Sale Timeline Character.AI expects sale completion by late November or early December 2026 with the service continuing during bankruptcy proceedings. > character ai expects the sale process to conclude by late november or early december ## Child Safety Concerns States warn chatbot interactions could lead to child harm including suicide after a 14-year-old died allegedly seconds after interacting with a chatbot. > the mother of a fourteen-year-old who died by suicide allegedly seconds after interacting with a chatbot ## Bankruptcy Court Hearing Abigail Ryan, representing states, told judge Brendan Shannon negotiations remain active but wants data protections for any buyer. > we're willing to work with the buyers to find safeguards but we don't want to see what has transpired in the past start over with a new purchaser ## Company's Financial State Character.AI reported monthly cash burn of $8 million to $9 million before bankruptcy filing with employee attrition concerns. > character ai was losing between eight million and nine million dollars per month before seeking chapter 11 protection ## Disney's New Role Disney hired Character.AI's former CEO Karan Deep Anand as chief technology officer effective October 2, 2.026. > on september 18 2026 disney announced it had hired character ai's former ceo karan deep anand as its newly created chief technology officer ## Key takeaway 40 state attorneys general require buyers of Character.AI to implement child data protections during bankruptcy sales.