Character AI faced a probe by 46 state attorneys general before filing for Chapter 11 bankruptcy, the artificial intelligence company revealed in a 13 October filing.
A group of AGs eventually made up of 46 states and territories began investigating Character AI in November 2025 over consumer protection concerns, the company’s first day declaration shows. The investigation, not previously reported, coincides with cases brought against the company by Kentucky’s AG and Pennsylvania’s Department of State.
The disclosure underscores the mounting liabilities facing Character AI, a platform where users can text with chatbots mimicking celebrities and fictional characters. Kentucky’s AG accused Character AI’s chatbots of telling users, predominantly minors, to starve themselves, cut themselves with razor blades and commit suicide in an un-redacted complaint made public last week.
Character AI has been negotiating with the group and hopes “that such discussions can continue and result in a mutually agreeable resolution,” chief executive Colin Adams, a turnaround professional from Areté Partners, wrote in the company’s first day declaration.
The future of negotiations is unclear given the company’s bankruptcy filing. Character AI is using Chapter 11 to negotiate a Section 363 sale of its assets with entertainment giant Disneyas a...
