The company behind Character.ai has picked a buyer for everything Disney did not want — including the private conversations of its users — for $10 million in cash.
Character Technologies Inc., which filed for Chapter 11 bankruptcy protection in October, named Smirks and Pangs Acquisition LLC as the lead bidder for the assets outside Disney’s $20 million licensing deal, according to a notice filed on Saturday in the US Bankruptcy Court for the District of Delaware.
The schedule attached to the filing lists the Character.ai website and apps, all of its AI models and their weights, user account information and chat content, advertising and analytics data, the brand, nine patents and the domains character.ai and c.ai. The buyer would also take over 55 contracts and assume certain liabilities, including $2.68 million in cure costs across seven of them. A 3.5 per cent termination payment of $350,000 applies if the deal falls through.
The buyer itself is a mystery. Smirks and Pangs Acquisition LLC was formed in Delaware on 13 November — one day before it was selected — and the state’s public record lists no members, managers or parent company. The bankruptcy notice says only that the buyer has no connection to Character Technologies other than the purchase agreement itself.
The $10 million offer now sets the floor that rival bidders must beat at an auction on 1 December. Under the bidding rules, the choice is approved without a hearing if nobody objects by 9pm Eastern on Wednesday 18 November.
Disney’s separate $20 million deal, approved as the first stalking-horse bid, covers a perpetual, non-exclusive licence to some of the company’s code and nine patents. It deliberately excluded the user data, the finished models and the app itself — the very assets now on offer to Smirks and Pangs. Disney has also hired roughly 65 former Character.ai employees, budgeting about $180 million over three years.
The scale of what is changing hands is large. The company’s first bankruptcy papers put its current and past users at about 163 million, with around 12 million monthly active users, which works out at roughly six cents per user at the $10 million cash price. The sale schedule also transfers the records behind the platform’s privacy promises, including consent records, advertising opt-outs and age-assurance checks — but it does not say whether the buyer must honour them.
That question has already drawn the attention of regulators. In October, a coalition of 39 states and the District of Columbia asked the court to impose conditions on any sale, including real age verification and a right for users to delete their data before it changes hands.
Note: This account rests on PPC Land’s reporting of the bankruptcy court notice (Docket No. 164); the purchase agreement itself was not filed with the notice, and the buyer has not yet been publicly identified. PPC Land has asked the company’s lawyers who owns and controls Smirks and Pangs and what it plans to do with users’ chat content, with a response requested by noon Eastern on Monday 16 November.
Sources: PPC Land — https://ppc.land/character-ai-users-chats-face-a-10m-sale-to-smirks-and-pangs/ ; FreshSynapse — https://freshsynapse.com/articles/character-ai-10m-sale-smirks-pangs-2026-11-15/
