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Disney agrees to hire at least 60 Character.AI employees for about $60 million

· by Pondero Newsdesk

The short version

A bankruptcy filing shows Disney offering jobs to the majority of Character.AI's remaining staff and bidding $20 million for some of its assets, with another buyer still able to outbid it.

Disney agrees to hire at least 60 Character.AI employees for about $60 million

Disney agreed to extend job offers to at least 60 Character.AI employees, the majority of the bankrupt chatbot startup's remaining staff, at a combined annual compensation of roughly $60 million, according to a bankruptcy filing spotted by Bloomberg and reported by TechCrunch on October 18. Character.AI, a companion-chatbot platform that a wrongful-death lawsuit and a government child-safety investigation helped push into bankruptcy, is handing over both talent and technology in the deal, and neither filing addresses what happens to its 20 million monthly active users.

What happened

According to the filing, the "vast majority" of Character.AI staff who received Disney offers accepted them, per TechCrunch's report. This hiring plan sits inside a larger asset sale: Character.AI, which filed for Chapter 11 bankruptcy on October 13 listing assets and liabilities each between $50 million and $100 million, had separately agreed to sell some of its assets to Disney for $20 million plus a non-exclusive, perpetual license to its technology, according to TechCrunch's report on the bankruptcy filing. Character.AI's former CEO, Karandeep Anand, joined Disney as its first chief technology officer in September, and the bankruptcy filing says Disney will lean on former Character.AI staff who moved over with him to handle the transition.

The $20 million bid is a floor, not a lock

Both TechCrunch reports describe the Disney offer as a stalking-horse bid, the opening bid in a court-supervised auction that sets a floor another company can still beat before the sale closes. Character.AI CEO Colin Adams said in the bankruptcy filing that if no actionable higher bid emerges, the platform will be wound down rather than sold. Neither filing addresses what happens to Character.AI's app or its user base, which the company had put at 20 million monthly active users as of October 2024, if Disney's bid prevails or if the platform shuts down instead.

Context and reactions

Character.AI's five years were marked by rapid early growth, a $2.7 billion licensing deal that sent co-founders Noam Shazeer and Daniel De Freitas back to Google in 2024, and mounting legal exposure: a wrongful-death lawsuit filed by the mother of a 14-year-old Florida boy, and a Texas attorney general investigation into child-safety practices, both tied to the platform's chatbots. Adams said in the bankruptcy filing that "significant legal, regulatory, and operational headwinds" drove the board to pursue a court-supervised sale rather than continue operating independently.

What to watch next

For Character.AI's 20 million monthly active users, the open question is simple: whether Disney keeps the app running once the sale closes, expected in late November or early December, or winds it down, assuming no competing bidder tops Disney's offer first.

Sources