Disney to hire most of bankrupt Character.AI's staff
A court filing shows Disney offered jobs to at least 60 Character.AI employees, worth about $60M a year, alongside its $20M stalking-horse bid for the chatbot firm.
LandGadget Newsroom · · 3 min read
Character.AI, one of the best-known AI chatbot apps, filed for bankruptcy this week, and most of the people who built it are heading to Disney. A court filing spotted by Bloomberg and reported by TechCrunch says Disney agreed to make job offers to at least 60 Character.AI employees, the majority of the workforce, with estimated pay of about $60 million a year. The filing adds that the "vast majority" of those who got offers accepted.
How the deal works
Character.AI's owner, Character Technologies, started a voluntary Chapter 11 case in Delaware on October 12, according to its announcement. Disney is the stalking-horse bidder: it offered $20 million for a non-exclusive, perpetual licence to certain Character.AI intellectual property and claims. Disney will also provide transition services through the former Character.AI staff it hired, so the platform can keep running for a limited time while the sale goes ahead.
Because it is a stalking-horse bid, another buyer can still come in with a higher offer. Character.AI expects the sale to close in late November or early December.
The hiring link goes to the top. Former Character.AI CEO Karandeep Anand recently became Disney's first chief technology officer.
Why Character.AI ran out of road
The filing says that despite a "large and engaged user base", the company was weighed down by high costs and "potential litigation-related liabilities and regulatory engagement". Character.AI has faced a lawsuit from the mother of a 14-year-old boy who died by suicide after becoming obsessed with one of its chatbots, and it is under government scrutiny over child safety. Reuters, via NBC News, also notes lawsuits filed by Kentucky and Pennsylvania.
For the wider AI industry, the move looks like a familiar pattern: a big company gets the talent and a licence to the technology without buying the whole startup and its legal baggage. It also comes as the safety of AI models is getting more attention, as in recent reports of AI agents behaving badly in tests.
Frequently asked questions
Is Character.AI shutting down?
Not yet. The company says it will keep the platform running during the sale. According to Reuters, it could be shut down if no buyer is found to keep it going.
Is Disney buying Character.AI?
Not outright. Disney's $20 million bid is for a non-exclusive licence to certain intellectual property and claims, and it is hiring most of the staff.
Can someone else still buy the company?
Yes. Disney is the stalking-horse bidder, so rivals can make higher offers before the sale closes, expected in late November or early December.
If you would rather run AI chatbots on your own hardware instead of a cloud app, our guide to choosing a laptop for local AI explains what you need.
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