According to court filings, Disney will hire 66 of Character.AI's 86 employees at an estimated $60 million annually, totaling approximately $180 million over three years. The "vast majority" of employees who received offers have already accepted them, as reported by TechCrunch and PPC Land. This employment offer comes just days after Character.AI filed for bankruptcy on October 12, 2026, with the remaining 18 employees staying at the bankrupt company. The deal represents a reverse acqui-hire structure where Disney acquires the team without purchasing the company itself.
As reported by PPC Land, Disney's offer of $180 million over three years for the Character.AI team represents three times the value of the asset deal it previously agreed to acquire. The startup had earlier announced that Disney agreed to acquire some of its assets for $20 million, making the employment component significantly larger than the asset purchase. The license agreement covers code for Character.AI's training, safety and serving systems, plus nine patents, though it excludes the app, brand, user data, chats, training data and finished models that remain with the bankrupt company.
According to the court filings, Disney's offer is structured as a stalking horse bid, which sets the minimum price for a company's assets in a bankruptcy sale. As reported by PPC Land, the license is non-exclusive and perpetual, with rival bids required to top $21.7 million. The auction timeline includes a bid deadline of November 20, auction on November 23, and sale hearing on November 24. If no qualifying bid arrives, the deal proceeds without auction. The company's motion indicates "Character's platform will be wound down" if no buyer emerges.
The employment deal comes shortly after Karandeep Anand, Character.AI's former CEO, joined Disney as its first-ever chief technology officer last month. As reported by Laughing Place, this follows a Disney layoff of several hundred jobs, some in its tech divisions. The hiring represents a strategic move to acquire the startup's talent and technology capabilities, particularly given Disney's previous accusations that Character.AI copied its characters. The deal structure shows where value flows in AI startup failures, with most money following the people rather than the company or creditors.
According to the bankruptcy filing, Character.AI, an interactive chatbot platform, filed for bankruptcy just five years after it started. The filing indicates the company still had a "large and engaged user base" of approximately 163 million current and past users, as reported by PPC Land. The startup has faced legal pressure, including a lawsuit from a mother claiming her 14-year-old son became obsessed with a chatbot before dying by suicide, and government investigations over child safety concerns. Several state attorneys general have asked the bankruptcy judge to protect user data, especially data on minors, for whoever wins the auction.
