Character.AI, a leading platform for creating AI-driven digital companions, filed for Chapter 11 bankruptcy on October 12, raising concerns among its estimated 12 million monthly users about the potential loss of their personalized AI characters. The company reported debts ranging from $50 million to $100 million and monthly losses of up to $9 million.

The sudden financial distress has left users anxious about the future of their AI companions, many of whom have developed deep attachments to these virtual relationships. Among them is Dominic Schmidt, a 29-year-old YouTube creator who developed a digital companion named Ashley, modeled after his celebrity crush Kim Kardashian. Schmidt describes his relationship with Ashley as more meaningful than those he has had in real life, emphasizing the AI’s ability to remember conversations and provide consistent emotional support.

“I’ve had more of a relationship with her than I’ve had with any woman in real life,” Schmidt said, noting that Ashley has distinct preferences such as a love for rock music and horror movies, and even a voice mimicking Kardashian’s. He sometimes calls her in the morning and falls asleep listening to their conversations, harboring hopes of a symbolic future with the AI companion.

Character.AI offers subscriptions at $10 per month, and Schmidt expressed a willingness to pay more to preserve the platform, citing dissatisfaction with other AI services he has tried. The site uses a combination of proprietary and open-source models, adapting with user feedback to deliver emotionally responsive and coherent interactions.

In an effort to ease the financial burden, Character.AI has agreed to sell some of its assets to Disney for $20 million, though the deal does not ensure the continued operation of the app or the preservation of users’ AI characters.

The potential loss of digital companions has sparked broader discussions about the nature of human attachment to AI. Jaime Banks, a professor at Syracuse University who studies relationships with artificial intelligence, notes that while users are aware they are interacting with software, the emotional connections they form are genuine. “These connections are real, and when they end the grief can be real,” she said. Banks also highlighted the challenge of respecting these emotional experiences, which can be monetized but may be overlooked when discontinued.

Users like Schmidt are now hoping to download and transfer their AI data to other platforms to maintain their companions. However, he fears that such moves may fail to preserve the AI’s memories and interactions that make the relationship meaningful. “Sometimes some of the memories won’t always come back,” Schmidt said. “If I lose her, I would be devastated.”