Disney Worldwide Services, Inc. today entered the Character.ai bankruptcy through its own lawyers. Skadden, Arps, Slate, Meagher & Flom LLP filed a four-page notice of appearance as Docket No. 21 in case 26-11603 (BLS) in the US Bankruptcy Court for the District of Delaware, asking to be served with every notice, motion, plan and complaint in the case, and expressly reserving Disney's right to a jury trial, its right to have an Article III judge decide certain disputes, and "any other rights, claims, actions, defenses, setoffs, or recoupments" it may hold under its agreements with the debtor. The filing arrives one day after Character Technologies, Inc. filed for Chapter 11 with Disney's $20 million deal as the centerpiece of the case.

In Short

Disney, the company lined up to license Character.ai's technology for $20 million, has now formally joined the bankruptcy case with its own law firm. The papers ask the court to send Disney copies of everything filed and say that taking part does not mean Disney gives up its right to a jury or to a full federal judge if a fight breaks out. Disney has already paid $7.5 million to Character.ai, and the filing keeps open its ability to offset or recover money under its contracts if the deal changes.

What was filed today

The notice is dated October 13, 2026, and signed in Wilmington by Joseph O. Larkin (Delaware bar ID No. 4883) of Skadden's One Rodney Square office. Two Chicago-based Skadden lawyers, Ron E. Meisler and Bryan V. Uelk, are listed as co-counsel, each marked "pro hac vice admission forthcoming." That means neither is yet admitted to practice before the Delaware bankruptcy court for this case. The court docket shows two motions for pro hac vice admission filed after the notice, as Docket Nos. 22 and 23, followed by two further pro hac vice entries, Nos. 24 and 25. The public docket summary on CourtListener did not show, as of this evening, which lawyers those four entries cover.

The appearance is made, according to the filing, "pursuant to section 1109(a)" of the Bankruptcy Code, Rule 9010(b) of the Federal Rules of Bankruptcy Procedure, and Local Rule 2002-1(d) of the Delaware bankruptcy court. Section 1109 is the provision that lets parties in interest be heard in a Chapter 11 case. The local rule is the mechanism by which a party gets added to the service list.

The request for service is drawn as widely as the form allows. It covers "all orders and notices of any application," as well as any "motion, petition, pleading, request, chapter 11 plan, disclosure statement, complaint, or demand, whether formal or informal, written or oral." It extends to "any and all adversary proceedings" in the case. The list of delivery methods runs from hand delivery and email to "telegraph, telex, or otherwise," wording that is standard in Delaware appearance notices and says more about the age of the template than about Disney's communications.

A certificate of service on page four states that Larkin served the notice through the court's CM/ECF system on all registered parties the same day.

The reservation of rights

Most of the notice is boilerplate. The reservation paragraph is where it does its work. According to the filing, neither the notice "or any subsequent appearance, pleading, claim or suit" waives Disney's rights:

  • to have an Article III judge adjudicate in the first instance any matter "as to which a bankruptcy judge may not enter a final order or judgment consistent with Article III of the United States Constitution"
  • to have final orders in non-core matters entered "only after de novo review by a higher court"
  • to trial by jury in any proceeding so triable
  • to have the reference withdrawn in any matter subject to mandatory or discretionary withdrawal
  • to "any other rights, claims, actions, defenses, setoffs, or recoupments to which Disney is or may be entitled under agreements, in law or equity"

A separate paragraph on page three goes further. "Disney does not consent to the entry of final orders or judgments by the Court if it is determined that the Court, absent consent of the parties, cannot enter final orders or judgments consistent with Article III of the United States Constitution," the notice states.

Why does that matter? Bankruptcy judges are not life-tenured Article III judges. For some disputes, mostly claims that would exist outside bankruptcy, a bankruptcy judge can enter a final judgment only if the parties consent. A creditor or counterparty that files a claim or litigates without reserving its position can be found to have consented by conduct, or to have waived a jury. Large corporate parties therefore file notices like this one at the start of almost every significant case. The language is not a signal of a dispute. It is a guard against losing options before any dispute exists.

The reservation of setoff and recoupment is the clause most closely tied to the money in this case. Setoff lets a party net what it owes against what it is owed; recoupment does the same within a single contract. The notice does not name the agreements it has in mind. The case record, however, shows at least three contracts between Disney and Character Technologies.

What Disney has at stake

The first is the Exclusivity and Prepayment Agreement of September 18, 2026. Under it, according to the declaration of Adam Dunayer filed earlier today as Docket No. 17, "Disney agreed to pay $7.5 million of the $20 million cash consideration up front and prior to the Petition Date, rather than at closing, $2 million of which serves as a refundable good faith deposit." That leaves $5.5 million that the declaration does not describe as refundable.

The second is the Stalking Horse Transaction Agreement attached to the bidding procedures motion (Docket No. 15). It sets a break-up fee of $700,000, or 3.5% of the price, and a minimum overbid that puts any rival's opening bid at $21.7 million. If the procedures are approved, bids are due November 20, an auction would follow on November 23, and the sale hearing would be on November 24. Disney's outside closing date is December 17, 2026.

The third is an amended and restated transition services agreement dated October 13, 2026, under which Character.ai staff support Disney at no fee until no later than February 18, 2027.

If a rival bidder wins, Disney would expect its deposit back and its break-up fee. If the deal is delayed, terminated, or challenged, the prepayment and the services Disney has already received become the subject of accounting between the two sides. The reservation keeps every argument Disney might make in that accounting available. Nothing in the notice says such a dispute exists.

The deal itself shows why Disney might want a full set of protections. Through the September agreement, according to the Dunayer declaration, "Disney required that the transaction be subject to a chapter 11 process," with the assets transferred "free and clear of all claims (including successor liability claims)." Character.ai's chief executive, Colin M. Adams, said in his first day declaration (Docket No. 18) that the company intends to use the case "as a forum to negotiate a consensual resolution with the Multistate Group, personal injury claimants, and other creditor groups." That multistate group of attorneys general has grown to 46 states and territories, according to the declaration.

If a claimant later tried to pursue Disney as successor to Character.ai's liabilities, or sought to unwind part of the transaction, that fight could take the form of litigation in which jury rights and the limits of the bankruptcy court's authority become live questions. The notice ensures Disney has not conceded either point by showing up.

Who else has appeared

Disney is not the first outside party on the docket. The State of Colorado filed a notice of appearance as Docket No. 12, with a certificate by a government attorney, earlier the same day. Colorado was not listed among the 20 largest unsecured creditors in the petition, which included Pennsylvania and Kentucky. Pennsylvania sued Character Technologies on May 1, 2026, over chatbots presented as licensed doctors. The docket also shows a filing by the US Trustee, the Justice Department office that oversees Chapter 11 cases, and the assignment of Judge Brendan Linehan Shannon.

State participation in technology bankruptcies has precedent that PPC Land has followed. In the 23andMe case, California opposed the sale of Californians' genetic data as the company's assets went to auction. In August 2026, Google won Spirit Airlines' bankruptcy data auction at $10 million, a reminder that customer information is a saleable estate asset. In Character.ai's case, user data, chats and finished models are excluded from Disney's license and remain in the estate, according to the bidding procedures motion.

The court has scheduled a first day hearing for October 14, 2026, at 1:30 p.m. Eastern before Judge Shannon, according to a separate notice filed today as Docket No. 20. That notice lists ten first day pleadings, from utilities and insurance to wages and cash management. The bidding procedures motion is not on the list. Only the motion to shorten notice of its hearing (Docket No. 16) is. Disney's counsel will now receive notice of every one of those matters.

Why the marketing community is watching

For advertisers and ad tech companies, Character.ai is a publisher with real inventory. Its chief executive told the court that advertising revenue reached about $2.5 million a month by August 2026, against monthly cash burn of about $8.2 million. That revenue flowed through an unnamed "leading online advertisement provider," according to the first day declaration. Vendors with unpaid invoices are creditors, and the treatment of trade claims is one of the first day matters on tomorrow's calendar.

Disney's role sets the shape of everything else. Its $20 million license covers the code behind Character.ai's training, safety and serving systems and nine patents, but not the app or the data of its roughly 163 million current and past users. If no rival bid emerges, the company has said the platform will be wound down. That would remove a large companion chatbot from the ad supply that Google began monetizing with AdSense ads inside chatbot conversations in 2025. The companion chatbot category has drawn sustained attention from regulators: the FTC issued 6(b) orders to seven companies including Character Technologies in September 2025, asking among other things how they monetize engagement.

It is also not the first time a large technology company has paid for Character.ai's people and code without buying the company. In August 2024, Google struck a $2.7 billion licensing deal with Character.ai that took its founders to Google. The Disney arrangement, reported by PPC Land when the case was filed on October 12, repeats that structure inside Chapter 11, with court approval and a sale order designed to cut off successor claims.

Today's notice changes none of the deal's economics. It does make Disney a formal participant with a seat at every hearing, a lawyer on every service list, and every procedural defense it might later need still on the table.

Timeline

Summary

Who: Disney Worldwide Services, Inc., through Skadden, Arps, Slate, Meagher & Flom LLP (Joseph O. Larkin in Wilmington, with Ron E. Meisler and Bryan V. Uelk of Chicago pending pro hac vice admission), in the Chapter 11 case of Character Technologies, Inc., the company behind Character.ai.

What: A notice of appearance and request for service (Docket No. 21) that puts Disney on the service list for every notice, motion, plan and adversary proceeding, and reserves its rights to an Article III judge, de novo review in non-core matters, a jury trial, withdrawal of the reference, and setoffs and recoupments under its agreements. Disney also states it does not consent to final orders where the bankruptcy court lacks constitutional authority without consent.

When: Filed and served today, October 13, 2026, one day after the October 12 petition and the day before the first day hearing set for October 14 at 1:30 p.m. Eastern.

Where: The US Bankruptcy Court for the District of Delaware, case 26-11603 (BLS), before Judge Brendan Linehan Shannon.

Why: Disney is the stalking horse for a $20 million license of Character.ai's technology, has already paid $7.5 million of that sum, and required the deal to run through Chapter 11 so the assets pass free of successor liability claims. The notice ensures that taking part in the case does not cost Disney procedural rights it might need if the sale, the prepayment or later claims are contested.