Character Technologies, the company behind the Character.ai chatbot app, today filed a three-page notice in the US Bankruptcy Court for the District of Delaware that sets its first-day hearing for October 14, 2026 at 1:30 p.m. Eastern before Judge Brendan L. Shannon. One of the ten requests on that agenda asks permission to keep about 20 insurance policies, and the schedule attached to it shows that 12 layers of directors' and officers' cover cost the company $4,527,125 a year, close to 88% of an insurance program with roughly $5.16 million in annualized premiums.

In Short

Character.ai, a chatbot company that went bankrupt on October 12, told the court which of its requests a judge will look at on October 14. One of those requests is to keep paying for its insurance, and most of that money goes to policies that protect the people who run the company if they are sued. The hearing decides whether the company can keep paying its bills, staff, taxes and insurers while it tries to sell itself, and the sale rules themselves are not on that day's list.

The document

The filing is Document 20 in case 26-11603 (BLS), In re Character Technologies, Inc. It is a notice, not a motion: it asks for nothing on its own. Its job is to tell creditors, regulators and other parties what was filed and when the court will consider it. Heather P. Lambert signed it for Wilson Sonsini Goodrich & Rosati in Wilmington, with Erin R. Fay and Shane M. Reil also listed, as "Proposed Counsel to the Debtor and Debtor in Possession."

According to the notice, the company filed its voluntary Chapter 11 petition on October 12, 2026 and then filed ten "First Day Pleadings." It relies on the sworn declaration of chief executive Colin M. Adams, filed as Docket No. 18, as the factual basis for all of them. The hearing will take place "before the Honorable Brendan L. Shannon, United States Bankruptcy Judge for the District of Delaware," and the notice says out-of-town parties can join remotely through the court's eCourtAppearances tool. "Registration is required one hour prior to the hearing unless otherwise noticed," it adds.

All of the papers are available, according to the notice, "free of charge from the website of the Debtor's proposed claims and noticing agent," Stretto, Inc., at cases.stretto.com/chartech.

What the judge will hear on October 14

The notice lists ten items by docket number:

  • Docket No. 2: appointment of Stretto as claims and noticing agent
  • Docket No. 3: adequate assurance for utility providers and a bar on cutting off service
  • Docket No. 4: permission to maintain existing insurance policies, pay obligations under them, and renew or buy coverage
  • Docket No. 5: payment of certain prepetition taxes and fees
  • Docket No. 6: payment of prepetition claims of critical vendors
  • Docket No. 7: restating and enforcing the worldwide automatic stay, anti-discrimination provisions and ipso facto protections
  • Docket No. 8: redaction of personal identification information and procedures for notice of commencement
  • Docket No. 9: continued use of the cash management system and an extension of time to comply with section 345(b) of the Bankruptcy Code
  • Docket No. 10: payment of prepetition wages, benefits and other compensation
  • Docket No. 16: a motion to shorten the notice period for the hearing on the bidding procedures and sale motion

Most of those motions seek interim orders first and final orders later, which is the usual pattern: a judge approves what is needed to keep the business running for a few weeks and sets a second hearing for the rest.

What is not on the list

Three filings from the same day are absent. The bidding procedures motion itself, Docket No. 15, is not among the first-day pleadings; only the request to hear it on shortened notice is. The supporting declaration from the company's investment banker, Docket No. 17, is not listed either. Neither is Docket No. 11, the motion to reject the company's New York office lease. Based on the notice alone, the October 14 hearing will decide how quickly the sale rules can be heard, not whether Disney's stalking horse bid and the auction timetable are approved. That reading is an inference from the list; the notice does not explain why the three items were left off.

The distinction matters because the company has said its Disney deal carries milestones tied to a closing on or before December 17, 2026. Every day of notice the court grants on the bidding procedures comes out of a sale window that the company describes as short.

Twelve layers of directors' cover

Docket No. 4 is the motion that adds the most new information. According to the motion, Character maintains "approximately twenty" insurance policies covering general liability, property, business automobile, workers' compensation, media, technology and cyber liability, excess media, technology and cyber liability, directors' and officers' liability and excess liability, employment practices liability and fiduciary liability. Premiums are generally paid annually, and the motion says all of them were paid in full before the petition. Arthur J. Gallagher & Co. and its subsidiary Woodruff-Sawyer & Co. act as brokers for most of the policies, with no brokerage fees outstanding.

Exhibit C, the schedule of policies, is where the numbers sit. Twelve of the 20 entries are directors' and officers' (D&O) policies. All twelve incepted on January 15, 2026 and expire on January 15, 2028, a two-year term. The schedule lists an annualized premium for each:

  • Primary D&O: Beazley (Lloyd's of London), $500,000
  • Excess D&O: Forge, $400,000
  • Excess lead Side A difference-in-conditions: AIG, $375,000
  • Excess lead Side A: Berkshire, $312,500
  • Excess Side A: AXA XL $687,500, Berkley $515,625, Vantage $412,500, Sompo $330,000, Convex (Lloyd's of London) $264,000, QBE $255,000, Westfield $250,000 and RSUI $225,000

Those twelve premiums add up to $4,527,125 a year. The other eight policies total $632,730. The largest of those are media and technology errors and omissions and cyber liability with AmTrust at $314,094, excess cover for the same risks with Hamilton (Lloyd's of London) at $155,000, and general liability through Lloyd's London via CRC Wholesale Group at $125,000. Employment practices and fiduciary liability with Berkshire costs $26,000. The remaining four are small: CNA property at $2,322, CNA business auto at $1,365, and CNA workers' compensation at $6,443 for Florida, Hawaii, Nevada, New York, Pennsylvania and Virginia and $2,506 for California.

Across all 20 policies, annualized premiums come to $5,159,855. The schedule does not give policy limits, retentions or the total amount of cover, so the size of the tower in dollars of protection cannot be calculated from the filing.

What Side A means here

Nine of the twelve D&O policies are described as Side A cover. In D&O insurance, Side A pays directors and officers personally when the company cannot or will not indemnify them, a situation that bankruptcy makes more likely. The policies are bought for the individuals, not for the estate. Kentucky's attorney general sued both Character and its co-founders in January 2026, according to the Adams declaration, which is one illustration of why individuals connected to the company would want cover that does not depend on the company's own balance sheet.

The timing is also visible in the schedule. The D&O program started on January 15, 2026. The Adams declaration places the settlement of all then-pending personal injury lawsuits in January 2026 and the Kentucky lawsuit on January 8, 2026. The filing does not connect the purchase to either event, and no inference beyond the dates is possible from the record.

For scale, the CEO declaration puts advertising revenue at approximately $2.5 million in August 2026. A year of D&O premiums equals nearly two months of that ad income. Insurance cost appears as an ordinary operating expense, though, and the motion says nothing is currently owed.

A conflict with an earlier motion

The insurance schedule lists CNA Insurance Companies as the workers' compensation carrier for both policies. The wages motion filed the same day (Docket No. 10), which PPC Land covered earlier, named Travelers as the workers' compensation provider. The record does not yet explain the difference. It could reflect a change of carrier, a policy administered through Travelers, or an error in one of the documents.

Why the motion is needed

The motion says maintenance of the policies is required under the Operating Guidelines for Chapter 11 Cases issued by the Office of the United States Trustee for Region 3, as well as state and federal law. It asks for authority, "but not" a direction, to keep paying premiums, deductibles, claims and fees, and to renew, supplement or replace coverage. The insurers themselves, from CNA and AmTrust to every carrier in the D&O tower, appear by name in the list of parties Stretto checked for conflicts.

Three utility accounts

Docket No. 3 covers a much smaller exposure. According to the motion, Character had "approximately three" active utility accounts in its own name at the petition date, and paid about $15,000 a month for utility services on average over the twelve months to August 31, 2026. The motion excludes utilities billed through its landlord.

Exhibit C to the motion names them:

  • AT&T, internet, proposed deposit $145
  • Comcast, internet, proposed deposit $235
  • Pacific Gas & Electric, electricity, proposed deposit $8,230

The total, $8,610, would sit in a segregated account at Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, and be funded within 20 days of an interim order. The motion describes the figure as approximately half of the average monthly cost as of the petition date, net of existing deposits. Half of the $15,000 twelve-month average would be $7,500, so the deposit implies higher recent costs or uses a different base; the motion does not show the calculation.

Any provider that wants more must send a written request to Wilson Sonsini and the US Trustee, identifying the location and explaining why the proposal is inadequate. If the parties cannot agree within 14 days, either side can ask the court for a determination hearing. Until then, the provider cannot cut off service.

The utility list is notable for what it omits. Character's compute runs on cloud and GPU providers, which the critical vendors motion treats separately under a $2.5 million cap. Internet and electricity at the Menlo Park office are the only services the company classifies as utilities.

Taxes and a processor

Docket No. 5 asks to pay prepetition taxes and fees owed to federal, state, local and foreign authorities. Its table shows $175,000 in sales and use taxes, $50,000 in income and franchise taxes (with $10,000 due in the interim period) and $5,000 in fees to the tax processor, Numeral Two, Inc., for a total of $230,000, of which $190,000 is due before a final order. The motion's opening paragraph gives different totals, $225,000 and $185,000, a mismatch PPC Land noted when it covered the CEO declaration. The background section of the same motion also gives the petition date as "October 12, 2023," three years earlier than the actual filing.

The motion adds that Character has paid about $162,000 in income and franchise taxes so far in 2026, and that sales taxes on subscriptions are collected "through either the online platform or the application stores." Numeral Two's system is integrated with the payment flow and registers the company automatically in a new jurisdiction when a taxable sale occurs. Some authorities do not accept such processors, according to the motion, and in those places Character files manually.

The claims agent and its conflict list

Docket No. 2 seeks approval of Stretto. According to the application, the services agreement is dated September 24, 2026, six days after Character signed its exclusivity and prepayment letter with Disney. Character paid Stretto a $25,000 advance before the petition and says it reviewed proposals from at least two other court-approved claims agents. Delaware's local rules require a claims and noticing agent where a debtor has more than 200 creditors.

The longest part of the application is the list of parties Stretto searched for conflicts. Several names on it are familiar to marketers. AppsFlyer, the mobile measurement partner in which Google, Meta, Moloco and Unity took stakes at a $2.7 billion valuation in June 2026, appears among vendors and contract counterparties. So do Amplitude, Braze, Statsig, RevenueCat, LinkedIn, the performance agency New Engen and the brand studio Porto Rocha, along with Google, Apple's distribution arm, Microsoft Azure, Amazon Web Services, OpenAI, Cloudflare and Datadog. The list does not say what each is owed or which, if any, are critical vendors.

The litigation and investigation section names the FTC, Italy's Garante, the Pennsylvania Department of State, the Commonwealth of Kentucky, dozens of state attorneys general and an entry recorded as "U.S. Department of Justice, Consumer Finance Protection Branch." The Adams declaration's account of regulatory matters, as reported in earlier coverage, did not describe a Justice Department matter, and the application gives no detail. The list also names counsel to litigation counterparties, among them the Social Media Victims Law Center and the Tech Justice Law Project, which have represented families in suits against AI chatbot companies, and two Indian firms, Khaitan & Co. and Bachubhai Munim & Co.

The rest of the docket

The docket shows two other entries filed on October 13 outside the notice. The State of Colorado filed a notice of appearance (Docket No. 12). Reliable Companies, the transcriber, requested a standing order for transcripts of every hearing in the case (Docket No. 14), so a record of the October 14 hearing will exist.

Why it matters for the marketing industry

For ad buyers and vendors who sold to Character.ai, the October 14 hearing is the first point at which money can legally move again. The critical vendors cap, the cash management order and the wages order all determine whether the app keeps running through the sale. If the platform stays up, its ad inventory stays live. According to the CEO declaration, Character.ai's advertising grew to about $2.5 million a month before the filing, sold through programmatic partners.

The insurance schedule says something about how the company priced its own risk. A companion chatbot business with 46 state and territorial attorneys general in one investigation, separate state suits and an FTC inquiry spent far more insuring its leadership than on property, auto and general liability combined. Media and technology liability, the line that typically covers claims over content and data handling, cost another $469,094 a year across primary and excess layers.

Those regulatory pressures have built up over two years. PPC Land reported a Texas lawsuit over disturbing conversations with minors in December 2024, the FTC's 6(b) orders to seven chatbot companies in September 2025, and Pennsylvania's suit over a bot posing as a licensed psychiatrist in May 2026. Any brand or agency weighing ad placements inside AI chat products now has a court record showing what that exposure cost one operator, line by line.

What comes next

The hearing opens on October 14, 2026 at 1:30 p.m. Eastern. If Judge Shannon grants the interim orders, final hearings on the utility, insurance, tax, vendor, cash and wage motions will follow. The court will also decide whether the bidding procedures motion can be heard on shortened notice. Pennsylvania's responsive pleading deadline is November 2, 2026, and the Disney milestones require a closing on or before December 17, 2026. The D&O policies run until January 15, 2028, well beyond either date.

Timeline

Summary

Who: Character Technologies, Inc., operator of Character.ai, through its proposed counsel Wilson Sonsini Goodrich & Rosati. Judge Brendan L. Shannon presides. The motions name Stretto, Inc. as proposed claims agent, Gallagher and Woodruff-Sawyer as insurance brokers, Beazley, AIG, AXA XL and nine other D&O carriers, AT&T, Comcast and Pacific Gas & Electric as utilities, and Numeral Two as tax processor.

What: A notice of the Chapter 11 petition and first-day pleadings (Docket No. 20) listing ten requests for the first-day hearing. The insurance motion on that list shows 20 policies with about $5.16 million in annualized premiums, $4,527,125 of it for twelve D&O layers running from January 15, 2026 to January 15, 2028. The bidding procedures motion, the banker's declaration and the lease rejection motion are not on the hearing list.

When: The notice was filed today, October 13, 2026. The hearing is on October 14, 2026 at 1:30 p.m. Eastern.

Where: The US Bankruptcy Court for the District of Delaware, case 26-11603 (BLS), with remote participation through eCourtAppearances and documents posted at cases.stretto.com/chartech.

Why: First-day orders let a Chapter 11 debtor keep paying staff, vendors, taxes, utilities and insurers while it runs a sale. Character.ai says its platform will be wound down unless a buyer wants to keep it running, and the hearing determines how the business operates, and how fast the sale rules can be heard, during that period.