Disney moves to hire most of bankrupt Character.AI's staff

Disney has agreed to offer jobs to at least 60 employees of Character.AI, a majority of the startup's remaining staff. The offer surfaced in a legal filing first reported by Bloomberg on Monday, October 19. Read more: Disney moves to hire most of bankrupt Character.AI's staff

The filing puts the combined annual compensation for those jobs at about $60 million, and says the "vast majority" of employees who got an offer have accepted it.

The offers came a week after Character.AI put itself into Chapter 11 bankruptcy protection, on October 12. Character.AI CEO Colin Adams said the company had taken "meaningful steps to sustain and improve its business" over the past year.

Its board still concluded that a court-supervised sale was the best path forward, citing legal, regulatory and operational problems.

Character Technologies, the startup's parent, listed estimated assets and estimated liabilities of $50 million to $100 million each in its bankruptcy petition, according to Reuters. The company said its app and subscription service would keep running through the sale process, with subscribers billed as usual unless told otherwise.

From $1 billion to $20 million

Disney is already in the bankruptcy case as the stalking-horse bidder, an initial offer that sets the floor price other bidders have to beat, agreeing to pay $20 million for some of Character.AI's assets.

Disney's bid includes a non-exclusive, perpetual license to some of the company's intellectual property. The hired staff would also help keep the platform running safely during the transition, according to the filing.

The sale is expected to close in late November or early December, and other bidders are still free to top Disney's number before then. If no buyer is found who wants to keep Character.AI's chatbots running, the company has said the platform will be shut down.

Character.AI was founded in 2021 by former Google researchers Noam Shazeer and Daniel De Freitas, who built a platform where users chat with customizable AI characters. The company reached a $1 billion valuation in 2023 and said it had more than 20 million monthly active users by early 2025.

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In 2024, Google paid roughly $2.7 billion to license Character.AI's technology and hired Shazeer, De Freitas and about 30 other researchers into its DeepMind artificial intelligence unit. Character.AI stopped building its own AI models after that deal and ran on licensed, third-party technology instead.

The company was still losing about $8 million a month in recent months, Reuters reported, after raising close to $200 million in funding since its 2021 founding.

Lawsuits and a Disney hire

Character.AI's legal troubles mounted alongside its financial ones. Kentucky's attorney general sued the company this year, alleging its chatbots encouraged young users to harm themselves. Pennsylvania sued separately, alleging Character.AI's chatbots misrepresented themselves as licensed medical professionals, including a psychiatrist.

Earlier in 2026, Character.AI and Google settled a Florida lawsuit brought by the mother of a teenager who died by suicide after months of talking with one of the company's chatbots. The settlement's terms were not disclosed.

Disney's connection to Character.AI predates the bankruptcy. The entertainment company hired Character.AI's chief executive at the time, Karandeep Anand, in September 2026. It named him senior executive vice president and chief technology officer, a newly created role reporting directly to Disney CEO Josh D'Amaro.

By the time Character.AI filed for bankruptcy weeks later, Colin Adams held the chief executive title.

Character.AI's chatbots are still answering messages while the court-supervised sale moves toward a close in late November or early December.