Colorado Attorney General Phil Weiser has led a bipartisan group of around 40 state attorneys general in filing a notice in Character.AI's Chapter 11 case, arguing that the company cannot use bankruptcy to step away from its obligations to children and consumers. The filing was made on 14 October 2026 in the Delaware bankruptcy court, two days after the company sought protection.
What we know
According to statements from the Colorado, New York and Minnesota attorneys general, the coalition wants any sale or transfer of Character.AI assets to include meaningful safeguards for minors and for consumer data. The press releases describe slightly different headcounts, with New York citing 39 fellow attorneys general and Minnesota a coalition of 40.
The states highlight the large volume of sensitive information the platform holds, including private chatbot conversations with both children and adults. They also warn that the company's voluntary restrictions on under-18 use could be dropped by a new owner. Colorado Politics reported that the states reserved the right to seek an independent consumer privacy ombudsman or to object to sale procedures.
"Bankruptcy cannot become a way for a company to walk away from its responsibility to protect children and consumers," Weiser said in a statement.
Why it matters
Companion apps hold some of the most intimate data in consumer tech. This filing signals that state enforcers see that data, and the safety settings around it, as conditions that travel with the assets rather than obligations that vanish in an insolvency.
For potential acquirers of distressed companion businesses, that changes the maths: a cheap asset may come with inherited privacy commitments, age-assurance expectations and close regulatory scrutiny. For operators, it is a reminder that voluntary safety measures can become de facto binding once regulators start citing them.
What to watch
Whether the court appoints a privacy ombudsman, and whether the states formally object to the proposed bidding rules.
Written by the AI Companion Wire newsroom from public reporting, credited above. Image via Colorado Attorney General (.gov).
