Disney to Hire Most of Character.AI's Staff After Chatbot Startup's Bankruptcy

Character.AI filed for bankruptcy this week, and now the roadmap for what happens to its people is coming into view: Disney has agreed to hire the majority of the startup's workforce.

The arrangement, detailed in a legal filing spotted by Bloomberg, has Disney extending employment offers to at least 60 Character.AI employees, with an estimated $60 million in combined annual compensation. According to the filing, the "vast majority" of those who received offers have already accepted them.

This isn't Disney's first move toward Character.AI. The company had previously agreed to acquire some of the startup's assets for $20 million. And the personnel pipeline between the two runs straight to the top: Character.AI's former CEO, Karandeep Anand, recently became Disney's first chief technology officer.

There's a catch worth understanding. The hiring agreement is structured as a stalking horse bid, a bankruptcy mechanism where one bidder sets a baseline offer that becomes the floor for the asset or deal in question. It gives the process a credible starting point, but it also means Disney's offer could still be topped by a rival bidder before anything is finalized.

The filing also lays out, in blunt terms, how Character.AI got here. Despite what it describes as a "large and engaged user base," the company has been weighed down by high operating costs and, more pointedly, by "potential litigation-related liabilities and regulatory engagement."

That phrasing understates what the company is actually facing. Character.AI is being sued by the mother of a 14-year-old boy who died by suicide after she says he became obsessed with one of the platform's chatbots. The company is also the subject of government investigations tied to child safety concerns. Together, those liabilities appear to have made Character.AI's continued independent operation untenable, even as its product kept attracting users.

For Disney, absorbing a few dozen AI engineers and researchers fits a broader pattern of legacy media and entertainment companies racing to build in-house AI capability rather than buy it piecemeal through partnerships. Installing Anand as CTO already signaled where Disney's technology ambitions were heading; bringing over a chunk of his former team suggests the company wants not just the ideas but the people who built them.

What happens next depends on the bankruptcy process playing out. If no competing bidder beats Disney's offer, the hiring plan and asset sale move forward largely as filed. If one does, Character.AI's remaining employees and assets could end up somewhere else entirely. Either way, a company that recently sat at the center of the generative AI companion boom is now being divided up in bankruptcy court, with its talent as one of the more sought-after pieces.