Character.AI sale objection seeks clearer notice for users’ legal claims
US state attorneys general have challenged the proposed rules for Character Technologies’ bankruptcy sale. They want users told plainly how the terms could restrict legal action involving former staff and other third parties. Their new objection also seeks more time and access for rival bidders. Privacy issues remain open for the sale hearing, and the court has not ruled on these requests.
Artificial Intelligence··Midday
Users’ claims enter the sale-rules dispute
Users pursuing personal-injury claims are at the centre of a new demand for clearer notice in Character Technologies’ bankruptcy sale. The company runs the Character.AI chatbot platform. In their October 23 objection to proposed auction rules, US state attorneys general argue that the notice should spell out potential restrictions on legal action involving former staff and other third parties. They request an announcement within the platform, as well as its blog and community pages, and direct plain-language notification to claimants and their lawyers. The filing is before the bankruptcy court in Delaware.[1]
Rival bidders seek more time and employee access
Rival bidders’ access to employees and the time allowed for preparing offers are also contested. The states ask for a bid deadline extended by a minimum of 21 days. They want creditors to be able to object after the winner is announced. They also oppose treating approval of auction procedures as advance endorsement of Disney’s earlier agreements, while saying they are not seeking to undo those agreements in this motion. A hearing on the procedures is set for October 30. November 24 is the proposed date for considering the sale.[1]
User data remain outside the proposed Disney license
The proposed Disney license leaves the Character.AI application, users’ conversations and personal data with the bankruptcy estate. Privacy during transition services remains an issue for the sale hearing: the states reserve their argument that access to personal information requires a consumer privacy ombudsman. They also retain objections concerning releases, injunctions and regulatory powers. The October 23 filing follows a separate notice of interest from October 14. The court has yet to decide the new requests.[1]
