Disney is set to absorb most of Character.AI's team after the chatbot startup filed for bankruptcy this week. According to a legal filing reported by TechCrunch, Disney has agreed to make employment offers to at least 60 of the company's employees — the majority of its workforce — with combined annual compensation estimated at $60 million. The filing also states that the vast majority of those offered jobs have accepted.
The move follows Character.AI's earlier announcement that Disney would acquire some of its assets for $20 million, and the recent appointment of former Character.AI CEO Karandeep Anand as Disney's first CTO. However, the agreement is a stalking horse bid, meaning Disney's offer sets a baseline in a bankruptcy auction and another company could still come forward with a higher bid.
The filing attributes Character.AI's collapse to high costs and "potential litigation-related liabilities and regulatory engagement," despite its large and engaged user base. The company faces a lawsuit from the mother of a 14-year-old boy who died by suicide after becoming obsessed with a Character.AI chatbot, as well as government investigations into child safety concerns.