Direct answer: Days after chatbot startup Character.AI filed for bankruptcy, Disney has agreed to hire the majority of its workforce — offers to at least 60 employees, carrying an estimated $60 million a year in compensation. It’s the latest twist in a saga that already saw Disney accuse the startup of harming children, then bid $20 million for its technology.
What happened
A legal filing in the bankruptcy proceedings, first spotted by Bloomberg and reported by TechCrunch, reveals the employment terms Disney agreed as part of Character Technologies’ Chapter 11 sale:
- Employment offers to at least 60 Character.AI employees — the majority of the startup’s workforce.
- Estimated $60 million in annual compensation for those hires.
- The “vast majority” of employees offered jobs accepted them, per the filing.
- This is a “stalking horse bid”, so another company can still come forward with a higher offer.
Business Insider’s reading of the filing — summarised by US Brief — adds detail: the precise headcount is 66 workers, and Disney is funding a $30 million retention pool on top, with total pay and retention spending expected to reach about $180 million over three years. Of the 66, 56 have already resigned from Character.AI, with the other 10 awaiting US work visa updates. Competing bids are reportedly due by 20 November, with a sale expected to close in late November or early December.
The backstory makes the deal remarkable. Character Technologies filed for bankruptcy on 12 October 2026, after lawsuits — including one alleging its chatbots encouraged a teenager’s suicide, and two state-level suits — tanked a business that reportedly had over 20 million monthly active users. Disney, which had previously sent the startup a cease-and-desist accusing it of harming children, then bid $20 million for a non-exclusive, perpetual licence to its chatbot IP. And the startup’s former CEO, Karandeep Anand, recently became Disney’s first chief technology officer.
This is also a familiar playbook: US Brief notes it mirrors Character.AI’s own 2024 deal with Google, which licensed the startup’s model technology and rehired its co-founders Noam Shazeer and Daniel De Freitas. Licence the tech, hire the talent, leave the liabilities behind.
What it means for UK small businesses
1. The acqui-hire is the new acquisition. Disney isn’t buying Character.AI — it’s buying the team and licensing the tech while the bankruptcy handles the liabilities. If you run a small AI or software firm, your people are your most portable asset. Founders should know their team’s market value; employees should know that in a distressed sale, the talent package is often worth more than the company.
2. Big companies are staffing up AI fast — so should your roadmap. Disney hiring 60+ AI engineers plus a new CTO signals where the money is going. As we covered in our piece on Epic Games going AI-first for its Disney collaboration, entertainment and retail are racing to deploy AI. If your suppliers and competitors are hiring AI talent, “wait and see” is falling behind.
3. Vendor stability is a procurement question. Character.AI had 20 million monthly users and still collapsed under legal costs. If your business depends on a startup’s chatbot or AI tool, ask the uncomfortable questions: what’s their legal exposure, who owns their IP, and what happens to your data if they go under? Our full breakdown of the Disney–Character.AI $20M saga walks through the data risks in AI vendor deals.
Honest limits / what to watch
- It’s not a done deal. The stalking horse structure exists precisely so a higher bidder can swoop in. The employment offers could end up attached to a different buyer — or none at all.
- Hiring isn’t keeping. 56 resigned, 10 are stuck on visas, and a $30 million retention pool exists because Disney expects attrition. Watch who actually stays after year one.
- The liabilities stay behind. Disney gets the people and a licence; the lawsuits and regulatory probes remain Character Technologies’ problem. That’s the point — but it also means the underlying product-safety questions never got answered by the company that caused them.
- Users are the loose end. Character.AI says the platform keeps running during the sale, but a wind-down is explicitly on the table. If you built anything on top of Character.AI, have an exit plan.
FAQs
How many Character.AI employees is Disney hiring?
Disney agreed to make employment offers to at least 60 Character.AI employees — the majority of the workforce — per a legal filing in the bankruptcy proceedings. Business Insider’s reading of the filing, summarised by US Brief, puts the precise figure at 66 workers.
How much will Disney pay them?
An estimated $60 million a year in total compensation. Business Insider reports Disney is also funding a $30 million retention pool, bringing expected total pay and retention spending to about $180 million over three years.
Did the employees accept?
Per the filing, the “vast majority” of those offered jobs accepted. Business Insider reports 56 have already resigned from Character.AI, with the other 10 awaiting US work visa updates.
Is Disney buying Character.AI outright?
No. Disney’s $20 million agreement is for a non-exclusive, perpetual licence to certain intellectual property — not the company itself. The employment offers are part of a separate “stalking horse bid,” meaning another bidder can still come forward with a higher offer. Competing bids are reportedly due by 20 November.
Why does Disney want Character.AI’s people?
Disney is staffing up its AI push — the startup’s former CEO Karandeep Anand recently became Disney’s first chief technology officer, and Disney needs AI talent after its OpenAI partnership fell apart.
What does this mean for Character.AI users?
The company says the platform will keep running during the sale, but it could ultimately be wound down if the liabilities aren’t taken on.
