Forty attorneys general ask for conditions on any Character.AI sale

Character Technologies, Inc., which does business as Character.AI, filed a voluntary Chapter 11 petition in Delaware on 12 October 2026, case 26-11603 (BLS), before Judge Brendan Linehan Shannon. That case is the subject of the earlier account. On 14 October, a coalition of attorneys general filed in the same case.

The filing is a Notice of Interest and Reservation of Rights. The copy posted by the New York Attorney General carries the court stamp “Case 26-11603-BLS Doc 33 Filed 10/14/26” and runs 28 pages. It is dated 14 October 2026. Stretto’s case page states the same case number, chapter, petition date, and judge. The Verge, Lauren Feiner, 18:47 UTC on 14 October, reports the filing the same day.

The notice says the states filed it to flag regulatory issues in any sale or transfer of the business or assets. The closing section asks the court, the company, and any purchaser to include terms of protection, particularly for children, and to tell consumers what those protections are. Each state reserves the right to seek a consumer privacy ombudsman under 11 U.S.C. §§ 332 and 363(b)(1), to object to a proposed sale, bidding procedures, or plan, to supplement the notice, or to seek other relief.

Who signed

New York Attorney General Letitia James said on 14 October that she and 39 other attorneys general warned that Character.AI should not be sold without protections for people whose conversations the company holds. The release names Alaska, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, New Hampshire, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and the District of Columbia. With New York, that is 40 offices. The notice caption names the same coalition. The Verge uses the same figure of 40.

What document 33 asks a buyer to maintain

The notice lists nine processes it says a purchaser should be prepared to keep:

1. Age assurance that does not rely only on a self-declared birthdate.
2. Limits on minors’ access to open-ended chats, and safeguards against harmful content in other features, including Stories.
3. Removal of characters that present themselves as therapists, psychologists, doctors, attorneys, or other licensed professionals.
4. Crisis-response protocols that detect and respond to self-harm and related crisis content, and that a simple click-through cannot turn off.
5. A privacy program with safeguards, accurate disclosures, risk assessments, and required consent, including before health information disclosed in chats is processed.
6. Disclosure of any sale of personal data, or of disclosure for targeted advertising, with opt-outs that apply to the account, and honoring opt-outs people have already used.
7. Limits on using chat content to train or fine-tune models, or for advertising or other commercial purposes, beyond uses the notice says consumers and parents validly consented to.
8. A way for consumers to see the data held about them, and a chance for every consumer to delete that data before any sale of it.
9. No false or misleading claims about the product’s safety, its suitability for minors, whether a character is human, or a character’s professional credentials.

What the notice says is already in place

The notice says the company has stopped open-ended chat for users it identifies as under 18. It says that limit covers only users the company correctly identifies, can be circumvented, does not reach other features such as Stories, and is voluntary, so a buyer could reverse it. It says several states had been negotiating terms with the company and had not reached agreement before the Chapter 11 filing. It says Kentucky had already filed a civil enforcement action. It also says several states opened investigations after a private lawsuit filed in 2024. This story does not describe that lawsuit, the Kentucky case, or any individual user.

On scale, the notice says Character.AI has over 20 million monthly active users. It says that, by the company’s own records, more than 21.6 million U.S. accounts had been created by 13 March 2025, including more than 2.1 million with a declared age under 18. The notice footnotes the user count to a company about page and the account figures to the Kentucky complaint.

The Verge reports that Character.AI and Disney did not immediately respond to requests for comment. The notice asks for sale conditions and leaves any sale order to a later ruling.