Chatbot startup Character.AI filed for bankruptcy earlier this week, and many of its employees have been offered positions at The Walt Disney Company. A court filing reviewed by Bloomberg provides additional detail on the arrangement between Character.AI and Disney.
Karandeep Anand, Character.AI’s former chief executive officer, recently joined Disney as the company’s first chief technology officer (CTO). Character.AI had previously said that Disney agreed to acquire certain assets from the startup for $20 million.
According to the filing, Disney agreed to extend employment offers to at least 60 Character.AI employees — which represents a majority of the startup’s workforce — and the combined annual compensation for those roles was estimated at about $60 million. The filing also states that the "vast majority" of employees who were offered positions at Disney accepted the offers.
The document notes that Disney’s proposal is a stalking-horse bid, meaning it sets a baseline but allows other potential buyers to make higher offers for the assets.
The filing further says that despite Character.AI’s "large and engaged user base," the company had been hampered by high operating costs and "potential litigation-related liabilities and regulatory engagement." Character.AI has faced a lawsuit brought by the mother of a 14-year-old boy who alleged her son became obsessed with one of the startup’s chatbots before taking his own life, and the company is also subject to government investigations related to child safety concerns.
In summary, Disney’s asset purchase and hiring commitments could preserve part of Character.AI’s operations and jobs, but the transaction remains subject to higher bids and the startup’s outstanding legal and regulatory challenges will continue to shape the bankruptcy process.
