The judge overseeing Character.ai's Chapter 11 case has indicated he will overrule objections from a coalition of states to the rules for auctioning the company's assets. A revised order pushes the key dates back by several days. PPC Land reported the development based on court filings made on 3 November.
What we know
Judge Brendan L. Shannon of the US Bankruptcy Court for the District of Delaware said at a 30 October hearing that he would overrule the objections, subject to changes to the order. A certification of counsel then filed a revised bidding procedures order. According to PPC Land, the bid deadline is now noon on 24 November, the auction is on 1 December and the sale hearing runs over 3 and 4 December. The deadline for closing a deal remains 17 December.
The states had asked for at least 21 more days for bidding, for the sale objection deadline to fall after the auction, and for a lower minimum bid to reflect $5.5 million Disney had already paid. None of these requests was granted. The one concession was the removal of a clause that would have treated a failure to object to the sale as consent to it. However, contract counterparties who stay silent past 18 November will still be deemed to consent. Florida continues to object, and the revised order does not mention a consumer privacy ombudsman.
Disney's terms are unchanged: a $20 million cash price, a $700,000 break-up fee and expense reimbursement, and a $21.7 million minimum for a rival bid.
Why it matters
The court is putting speed ahead of the states' concerns about procedure, which is normal in a distressed sale where the asset loses value every week. For regulators, the outcome shows the limits of bankruptcy objections as a way to shape how companion-app data is handled. The leverage that remains lies in sale-order conditions rather than in the timetable. For rival bidders, the tight window and $21.7 million floor favour parties who have already done their due diligence.
What to watch
Whether any additional stalking horse is named by 14 November, and whether the states return with objections to the sale itself.
Written by the AI Companion Wire newsroom from public reporting, credited above. Image via PPC Land.
