Disney Hired Bankrupt Character.ai Engineers, Not Its Characters

The Character.ai bankruptcy began with a Chapter 11 filing in Delaware on October 12, with Disney lined up as the opening bidder at $20 million. The court filings show what Disney is prepared to pay for, and what it has chosen to leave behind.

In its bidding procedures motion, Character.ai describes a platform that grew from one-on-one character chats into AI-generated visuals, video and audio. Before the filing, Disney agreed to hire the majority of Character.ai’s workforce, including former CEO Karandeep Anand, who became Disney’s chief technology officer on October 2. A court-filed term sheet puts pay for about 65 offered employees at roughly $60 million a year, plus a $30 million retention pool. Disney estimates three-year compensation and retention at about $180 million.

Disney’s $20 Million Character.ai Bankruptcy Bid

The proposed $20 million covers a perpetual, worldwide, non-exclusive license to certain Character.ai technology and patents, plus any claims against the employees who moved to Disney. Disney paid $7.5 million before the filing, $2 million of which is a refundable deposit.

What Disney left out is more revealing. Under the stalking horse agreement, the license does not cover Character.ai’s user data, user inputs and outputs, its training data or its finished models, including each user-selectable conversational model or chat style. The brand and consumer app are also excluded.

Disney has hired the engineers and is bidding to license the technology, while the characters, conversations and audience remain with the bankrupt company.

Character.ai Bankruptcy: 12 Million Users And Legal Risks

Character.ai serves about 12 million monthly active users, who average about 120 minutes a day on the platform, CEO Colin Adams said in a sworn declaration. Revenue rose from about $7.4 million in fiscal 2024 to $23.6 million in fiscal 2025.

Both deals paired a non-exclusive license and legal claims with key hires, and left the consumer platform with Character.ai.

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