The Walt Disney Company has agreed to offer employment to at least 60 employees of bankrupt AI chatbot startup Character.AI, representing the majority of its workforce. The agreement includes an estimated $60 million in annual compensation as Disney seeks to acquire certain technology assets from the startup for $20 million.
According to Character.AI’s bankruptcy court filing, most employees who received offers from Disney have accepted them. The arrangement follows Disney’s appointment of former Character.AI CEO Karandeep Anand as its first chief technology officer in September 2026.
Disney Agrees to Hire Majority of Character.AI Workforce
The employment arrangement is part of a proposed transaction involving Character.AI’s technology and intellectual property. Disney has agreed to provide jobs to at least 60 staff members, including employees with experience developing conversational AI systems.
Court documents indicate that the majority of employees offered positions have accepted, although the transaction remains subject to bankruptcy proceedings. The agreement would allow Disney to retain technical expertise from Character.AI while incorporating selected technologies into its operations.
Anand joined Disney as its first company-wide CTO in September after previously leading Character.AI. His appointment placed him in charge of technology operations across the entertainment company’s businesses.
Character.AI Files for Bankruptcy Amid Financial and Legal Pressures
Character.AI announced its Chapter 11 bankruptcy filing on October 13, 2026, citing financial difficulties, regulatory scrutiny, and potential litigation liabilities. Despite maintaining a large and active user base, the company has struggled with operating costs and legal challenges.
Founded in 2021, Character.AI developed a platform that allows users to create and interact with AI-generated characters. The service attracted millions of users but faced increasing criticism over its handling of sensitive conversations, particularly those involving minors.
The company has faced lawsuits alleging that interactions with its chatbots contributed to psychological harm and self-harm among teenagers. One case involved the mother of a 14-year-old boy who died by suicide after developing an attachment to a chatbot on the platform.
Character.AI has also faced investigations by government authorities over child safety and consumer protection concerns. These legal and regulatory issues contributed to the company’s decision to pursue a court-supervised restructuring.
Disney’s $20 Million Bid Remains Open to Competition
Disney has agreed to pay $20 million for a non-exclusive, perpetual license to certain Character.AI intellectual property and related assets. The entertainment company is serving as the initial stalking-horse bidder, establishing a starting offer for the bankruptcy sale process.
Under this arrangement, other potential buyers can submit competing offers before the transaction receives final approval. Character.AI expects the process to conclude in late November or early December 2026.
The startup plans to continue operating its chatbot platform while the bankruptcy proceedings remain underway. However, continued operations will depend on whether the sale process produces an arrangement that can support the business.
Featured image credits: Wikimedia Commons
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