Character Technologies Inc., the company behind Character.ai, today asked the US Bankruptcy Court for the District of Delaware to let it pay up to $2.5 million to the vendors that store its data and run its platform, to restate a worldwide freeze on actions against it, and to keep the names and addresses of individuals out of the public record. One of the three first-day motions, filed a day after the Chapter 11 petition, contains a number the company had not put on the record before: about 163 million current and past users, none of whom, in the company's view, is a creditor entitled to notice of the case.

In Short

Character.ai, the chatbot app that went bankrupt on Monday, has asked the court for three practical things: permission to keep paying the companies that host its data and servers, a court order telling people around the world they cannot sue or seize its assets for now, and permission to hide personal details in its court papers. The filings show the app has had about 163 million users over time, and the company says it will tell them about the bankruptcy through its blog and the app rather than by email or post, because it does not consider them creditors. For advertisers and ad tech partners, the documents confirm that contracts with the company cannot be ended just because it filed, and that its data, code and IP depend on a short list of vendors the company says it cannot replace.

Three motions, one declaration

The three documents carry docket numbers 6, 7 and 8 in case 26-11603, all marked as filed on October 13, 2026. Document 6, 25 pages long, seeks authority to pay prepetition claims of critical vendors. Document 7, 24 pages, asks the court to restate and enforce the worldwide automatic stay, the anti-discrimination provisions and the ipso facto protections of the Bankruptcy Code, and to approve a form of notice. Document 8, 22 pages, asks for permission to redact personal identification information from the creditor matrix and other filings and sets out how the company will publicize the commencement of the case and the creditors' meeting under section 341.

Each is signed by Erin R. Fay, Shane M. Reil and Heather P. Lambert of Wilson Sonsini Goodrich & Rosati in Wilmington, as proposed counsel to the debtor. Each relies on the Declaration of Colin M. Adams in Support of the Debtor's Chapter 11 Petition and First Day Motions, filed at the same time. That declaration, which the motions say sets out the company's operations, capital structure and the events leading to the filing, was not among the documents reviewed for this article.

The filings are early drafts in one visible sense. The case number on every caption is followed by an empty bracket where the judge's initials will go. The hearing dates and objection deadlines in the proposed interim orders are blank. The form of notice attached to Document 7 is dated "October [●], 2026" and signed "/s/ Draft."

The petition itself, the $20 million stalking horse arrangement with Disney Worldwide Services and the structure of Character.ai's advertising supply were covered by PPC Land earlier today. The new motions do not revisit them. They show how the company intends to keep running while the sale process plays out, and what it considers too valuable to lose.

163 million users, and why they get a blog post

The user count appears in a footnote. In Document 8, the company explains that it will send the notice of commencement to its known creditors in accordance with the Bankruptcy Rules, and will in addition publish it on the website of its claims and noticing agent and on the company blog, with links on "its community engagement pages and/or its platform." The reason for the extra step is stated plainly: "While the Debtor does not believe its current and past platform users are creditors to whom notice must be provided, the Debtor historically has communicated with such parties through its platform, blog posts on the Debtor's website or online community webpages."

Footnote 7 then reads: "In addition, serving all of the Debtor's current and past platform users (approximately 163 million), even through email, would be cost-prohibitive."

That is the largest audience figure any of the bankruptcy documents reviewed so far has attached to Character.ai. It is not consistent with the other descriptions in the same set of filings. Document 7 describes "an online platform and application that hosts tens of millions of users across the globe." Document 8, in its California privacy argument a few pages before the footnote, says the company "receives personal information from consumers that number in the millions." The three figures may describe different things - cumulative accounts over four years against current users - but the motions do not say so. For comparison, Pennsylvania's complaint of May 1, 2026, which PPC Land covered when it was filed, put the platform's monthly active users at more than 20 million.

The company's position that users are not creditors also sits awkwardly next to its own public statement on Monday, which said the first-day motions would allow it to "honor commitments to platform users." The two are not necessarily in conflict: a commitment to keep the service running is not the same as a claim against the estate. But users who paid for subscriptions, or who have claims of the kind that state attorneys general and private plaintiffs are pursuing, may see the matter differently. The motion does not address paid subscribers specifically.

Who sees what

The redaction request is broader than the routine version. Many debtors ask only to redact home addresses. Character.ai asks to redact "the names, home addresses, email addresses, and other personally identifiable information and personal data of all natural persons" from the creditor matrix, the top 20 creditors list, the list of equity interest holders, the schedules and statements, related affidavits of service, "and any other documents filed with this Court."

Unredacted versions would go to the court under seal, to the Office of the United States Trustee, to counsel for any official committee, to Stretto as claims and noticing agent, and to any other party with the company's consent or a court order. Recipients would have to keep them confidential. Any party in interest could move to unseal. A creditor who needs to serve an individual whose details are redacted could do so through Stretto, with expenses reimbursed.

To justify redacting names as well as addresses, the motion cites the FTX case, in which the District of Delaware affirmed in December 2024 the permanent redaction of customers' names, home and email addresses. The motion notes that the FTX ruling rested on section 107(b)(1) of the Bankruptcy Code, which protects commercial information such as a customer list. Character.ai's own request is made under section 107(c), which protects individuals from identity theft or other unlawful injury. The motion also cites Boy Scouts of America, where the court allowed redaction of contact details for minors and their parents, and orders in American Tire Distributors, SunPower, PGX Holdings, SiO2 Medical Products, Boxed and Cred covering customer names or addresses.

The motion records that the US Trustee has objected to similar requests in other Delaware cases, and that the court overruled the objections in Art Van Furniture, Clover Technologies, Forever 21 and Anna Holdings. Whether the Trustee objects here will show up in the docket once the hearing dates are set.

The privacy argument: CCPA, UK GDPR and EU GDPR

Document 8 is the only one of the three filings that addresses data protection law directly, and it does so at some length. The company argues that publishing personal data on the docket could conflict with privacy regimes in "key jurisdictions where the Debtor operates."

On California, the motion summarizes the California Consumer Privacy Act: a right for California residents to request deletion of their personal information, civil penalties of up to $2,500 per violation and $7,500 per intentional violation, and three alternative thresholds for coverage - annual gross revenue above $25 million, buying, sharing, receiving or selling the personal information of more than 100,000 consumers or households, or earning 50% or more of annual revenue from selling consumers' personal information. "The Debtor likely qualifies as a CCPA Entity because the bulk of the Debtor's operations and employees are located in California and the Debtor receives personal information from consumers that number in the millions in connection with its operations," the motion states.

It is a hedged statement. The company does not say which threshold it meets. It does not say whether its revenue exceeds $25 million. The motion relies on the second test, the volume of consumer data, which in practical terms means the company is telling the court that it is the kind of business the CCPA was written for. Enforcement of that law has already reached publishers that share data with ad networks: Healthline agreed to pay $1.55 million in 2025 to settle allegations that it kept passing user data to advertising partners after users had opted out.

On Europe, the motion makes an argument that is unusual for a US bankruptcy filing. It says that the UK GDPR and the EU GDPR apply to processing "in the context of an establishment of a controller or processor" in the UK or the European Economic Area, and in some circumstances to organizations outside those regions that process data about people located there. It then works through the legal bases. Disclosure on a public docket, the company argues, could rest only on legitimate interests under Article 6(1)(f), because the "compliance with a legal obligation" basis in Article 6(1)(c) "is restricted to legal obligations under UK or EU law, and not foreign laws such as the Bankruptcy Code." Citing guidance from the UK Information Commissioner's Office dated March 23, 2026, which the motion says was last visited on October 9, 2026, the company argues that a person who would not reasonably expect the processing would have interests overriding any legitimate interest.

The motion also invokes data minimisation: "Disclosure of the unredacted home and e-mail addresses (or other Personal Data) of individual creditors, employees, stockholders or parties in interest on the public docket is not necessary for any purpose in administering this chapter 11 case."

The filing does not say whether Character Technologies has an establishment in the UK or the EEA, nor which of the two GDPR scope tests it believes applies to its own operations. It describes the laws, not its compliance with them. The October 9 access date for the ICO page is a small detail with a timeline attached: it falls one day after the board created its restructuring committee on October 8 and three days before the petition.

Threats against staff

The motion adds a reason that goes beyond identity theft. "Moreover, over the years, the Debtor's employees have also been subject to threats of violence and the Debtor employs physical security for this concern," it states. No further detail is given. The company pairs that statement with an account from a 2017 Charming Charlie bankruptcy, in which an employee's abusive former partner used publicly filed creditor and employee information to find her new address.

Critical vendors: $2.5 million to protect the data, code and IP

Document 6 is the most revealing about how the platform runs. It asks for authority, but not an obligation, to pay critical vendor claims up to an aggregate cap of $2,500,000, with up to $1,500,000 payable under an interim order. The interim amount, according to the motion, covers "only those amounts that will come due in the first thirty (30) days of this chapter 11 case."

The motion does not name a single vendor. It describes them by function: suppliers "that provide computing hardware and infrastructure to the Debtor, cloud space and storage for the Debtor's platform and data needs, various platform monitoring and safety services, along with providing services for other operational needs of the Debtor."

The stakes are put in unusually stark terms. "If the Debtor is unable to receive continued services from the Critical Vendors, it risks losing all of the data, code, intellectual property, and more that make up its entire business," the motion states. "Losing services from the Critical Vendors will cause irreparable damage to the Debtor's business and dissipate the value it seeks to monetize through the sale."

That sentence frames what is actually for sale. The Disney stalking horse bid, as described on Monday, covers a non-exclusive perpetual license of certain intellectual property and claims. Any bidder that wants the platform as an operating business would need the data and code to still exist on the day of closing. Both depend on third-party infrastructure.

What the creditor list suggests

The petition's list of the 20 largest unsecured creditors, filed on October 12, gives some indication of which vendors may be involved, though the motion itself does not connect the two. Google LLC is listed with a trade payable of $4,148,944, DigitalOcean with $1,953,100, Fireworks.ai, an AI inference provider, with a disputed $813,900, and Zayo Group, a network infrastructure company, with a disputed $119,210. Together those four trade claims total $7,035,154.

The proposed $2.5 million cap is smaller than Google's listed claim alone. If the infrastructure creditors on the top 20 list are among the critical vendors, none of them would be paid in full under the cap as drafted. The motion does say the company may settle claims "for less than their face amount," and that it can condition payment on a vendor accepting "some discount on its prepetition claim." Which vendors are designated critical will be recorded in a matrix the company must maintain, listing each vendor paid, the amount and the type of goods or services. The proposed orders do not require the matrix to be filed publicly.

Google's position in this case is layered. Character.ai's August 2024 licensing deal with Google was valued at $2.7 billion. Google is the largest unsecured creditor. And according to Character.ai's ads.txt file, reviewed on October 13, Google also holds a direct publisher account for the company, through which money flows the other way. The bankruptcy documents do not say what the $4.1 million payable is for.

Strained relationships, trade terms and clawbacks

The motion admits that the vendor relationships were already under pressure before the filing. "The Debtor's prepetition liquidity challenges and uncertainties about the future of its business have significantly hindered its ability to make timely payments to many Critical Vendors. This has led to strained relationships with vendors and threatens the Debtor's go-forward relationship with these vendors."

Payments would come with conditions. The company asks to enter "Trade Agreements" under which a paid vendor must keep supplying on terms no worse than those in place during the 180 days before the petition date - covering credit limits, pricing, cash discounts, payment timing, allowances and rebates - or accept a discount on its prepetition claim. A vendor that takes the money and then refuses those terms could have its payment reclassified as payment for postpetition services, have its trade agreement terminated, and face a claim that the payment was an avoidable postpetition transfer under section 549 of the Bankruptcy Code.

The factors the company says it used to pick critical vendors include whether a supplier is sole-source, whether an alternative could supply the same volumes on equal terms, whether replacement costs exceed the vendor's claim, whether non-payment could push the vendor itself into distress, and "the location of the vendor." A footnote reserves the right to pursue any critical vendor for violating the automatic stay - standard language, but a reminder that the company expects some counterparties to test the limits.

The company also asks the court to waive the 14-day stay that Bankruptcy Rule 6004(h) normally places on orders authorizing use of estate property, so payments could start as soon as an order is entered.

The worldwide stay and the ad tech contracts

Document 7 asks for an order that, by its own terms, adds nothing to the law. "For the avoidance of doubt, this Order does not expand or enlarge the rights afforded to the Debtor under the Bankruptcy Code," the proposed order states. Its purpose is to give the company a document it can send abroad.

The reason given is the international user base. The platform "is available for anyone, of an appropriate age, with access to an internet browser and an email address," and the app is distributed through the Google and Apple app stores. The company says its operations "routinely involve interactions with users, and occasionally involve interactions with certain governmental entities, who are based outside of the United States," and that it "operates in certain foreign states." None of those states is named.

The proposed order enjoins all entities, including foreign governmental units, from taking action to obtain possession of or exercise control over estate property, and specifically from "attempts to interfere with the Debtor's online operations." Section 525 language bars governmental units from revoking or refusing to renew licenses or permits solely because of the bankruptcy. The company also asks for authority to translate the motion, the order and the notice into other languages at its discretion.

For advertising partners, the most practical paragraph is the one on ipso facto clauses. The proposed order bars all persons from "terminating or modifying any and all contracts and leases to which the Debtor is a party or signatory" solely because of a provision triggered by the company's insolvency, its financial condition or the commencement of the case. That covers the kind of standard termination-on-bankruptcy clause found in many commercial agreements, including platform and supply contracts. The motion does not name ad systems, app stores or any specific counterparty. Contracts can still be ended on other grounds, and the order preserves each party's right to ask the court for relief from the stay.

The proposed notice is blunt about consequences. Any person or governmental unit acting in violation of the order "may be subject to proceedings in front of the Court for failure to comply with the Order and applicable law, including contempt proceedings resulting in fines, sanctions, and punitive damages against the entity and its assets inside the United States."

What the stay does not stop

Paragraph 10 of the proposed order states that nothing in it prohibits "the commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental unit's police and regulatory power to the extent such action or proceeding is not otherwise stayed or prohibited under applicable law." That exception matters in a case where the Commonwealth of Pennsylvania and the Commonwealth of Kentucky appear on the creditor list as litigation claimants. The motion does not discuss either case or say whether the company regards them as stayed.

The notice list for Document 7 is also wider than for Document 6. It includes the state attorneys general for all states in which the company does business, the Securities and Exchange Commission and the Department of Justice, alongside the US Trustee, the US Attorney for Delaware, the Internal Revenue Service, the top 20 creditors and counsel to Disney. Document 6's notice list does not include the attorneys general.

The motion cites similar orders in Casa Systems and WOM S.A. (both April 2024, District of Delaware), WeWork (November 2023, District of New Jersey), Amyris (August 2023) and Akorn (May 2020).

Wind-down or emergence? The documents disagree

The three motions share an identical background paragraph describing Character.ai as "a first in kind artificial intelligence ('AI') entertainment platform" with a "4-year lifespan as an active platform," which now generates visuals, video and audio around AI characters. Each states that high development costs, "coupled with potential litigation related liabilities and regulatory engagement," left the company unable to generate sufficient cash flow "to support its business in the present form," and that it filed "to engage in value-maximizing transactions for the benefit of its stakeholders."

Beyond that shared paragraph, the documents describe the destination differently. Document 7 refers twice to the company's "value-maximizing wind-down activities and related chapter 11 objectives." Document 6, filed the same day by the same lawyers, argues that maintaining normal trade credit "will improve the Debtor's chances of successfully emerging from chapter 11." The company's public statement on Monday said the platform would be wound down only if the sale process "does not result in a purchase that provides for a continuation of the Character.ai platform."

These phrasings may simply reflect template language from different first-day packages. But they are not equivalent, and for the advertisers, ad tech partners and app store operators that need to know whether the platform will exist in December, the distinction is the whole question.

Smaller inconsistencies

A few drafting details are worth recording because they may be corrected in later filings. Document 6's notice list includes "(f) the Authorities," a capitalized term the motion never defines. Document 7 cites the Third Circuit's Nortel decision as "F.3d 128," with the reporter volume missing. Document 8 is titled as a motion for "an Order" but asks in its first paragraph for interim and final orders, both attached.

Why it matters for the marketing industry

None of the three motions mentions advertising, ads.txt, ad revenue or any ad tech partner. The commercial picture in them is about infrastructure, data and people.

That is still relevant to the ad market. In a bankruptcy sale, data is often the asset that buyers want and regulators watch most closely. In August 2026, Google won Spirit Airlines' bankruptcy auction for deidentified corporate data at $10 million, with customer profiles carved out of the sale. In the 23andMe case, California's attorney general opposed the sale of Californians' genetic information in the bankruptcy proceedings. Character.ai holds a different and arguably more sensitive kind of dataset: the conversations of a companion chatbot user base that, by the company's own count, reaches 163 million accounts.

The motions do not say whether user data is part of any asset being sold. Disney's bid, as described, covers certain IP and claims. The critical vendor motion identifies the data as something the company "risks losing" without its cloud and storage vendors, which places it among the things the estate is trying to preserve. Regulators had already asked about it: on September 10, 2025, the Federal Trade Commission ordered seven companies including Character Technologies to disclose how they monetize companion chatbots, including through advertising.

The CCPA passage also deserves attention from anyone who handles data from the platform. By describing itself to a federal court as a business that "likely qualifies" under the CCPA because it receives personal information from millions of consumers, Character.ai has put its own data obligations on the record in a forum where state attorneys general receive notice.

For ad tech partners specifically, Document 7 confirms that a termination right triggered only by the filing cannot be used while the stay is in force. Document 6 shows the platform's survival through the sale process depends on a cap of $2.5 million for vendors whose listed claims are larger than that.

What comes next

The interim and final hearing dates, and the objection deadlines, will be filled in once a judge is assigned and the first-day hearing is held. The proposed interim orders list Linda Casey of the Office of the US Trustee in Wilmington as the Trustee's contact for objections. Under Bankruptcy Rule 2002(a)(1), known creditors must receive at least 21 days' notice by mail of the section 341 meeting. Users, if the court accepts the company's approach, will learn about it on the blog. Case documents are posted at cases.stretto.com/chartech, according to the proposed notice.

Timeline

Summary

Who: Character Technologies Inc., operator of Character.ai, represented by Wilson Sonsini Goodrich & Rosati as proposed counsel, relying on a first-day declaration by CEO Colin M. Adams. The motions affect its unnamed critical vendors, foreign creditors and governments, contract counterparties, individual creditors and about 163 million current and past users.

What: Three first-day motions. Document 6 seeks authority to pay critical vendor claims up to $2.5 million, $1.5 million on an interim basis, for vendors providing computing infrastructure, cloud storage, and platform monitoring and safety services, without which the company says it risks losing all of its data, code and IP. Document 7 asks the court to restate the worldwide automatic stay, the bar on terminating contracts because of the filing, and the bar on governmental discrimination. Document 8 asks to redact the names, addresses and emails of all individuals from court filings, citing the CCPA, UK GDPR and EU GDPR, and to notify users through the company blog and platform rather than by mail, on the basis that users are not creditors.

When: The motions were filed today, October 13, 2026, one day after the October 12 petition. Hearing dates and objection deadlines have not yet been set.

Where: The US Bankruptcy Court for the District of Delaware, case 26-11603. Character Technologies says the bulk of its operations and employees are in California and that it operates in certain foreign states.

Why: According to the company, high development costs combined with potential litigation liabilities and regulatory engagement left it unable to fund its business in its current form, and the motions are meant to keep the platform and its data intact during a sale process expected to finish in late November or early December 2026. The filings differ on the end state, describing both "wind-down activities" and the prospect of "successfully emerging from chapter 11."