The hires
Disney has agreed to make job offers to at least 60 Character.AI employees, TechCrunch reported on 18 October, citing a court filing. That is described as the majority of the company’s workforce, and the estimated annual compensation attached to the hires is about $60m.
The filing says the vast majority of the employees who received offers accepted them. It does not give a total headcount for Character.AI, so “the majority” is the filing’s own characterisation rather than a number that can be checked against a denominator.
The people are, at this point, the expensive part of the transaction. Character.AI said earlier that Disney had agreed to acquire some of its assets for $20m. Taken together, Disney is paying three times the asset price every year in salaries for the team that built them.
Why the company is in court
Character.AI filed for Chapter 11 bankruptcy protection this week. The filing attributes the position to high costs and to potential litigation-related liabilities and regulatory engagement, and says this came despite a large and engaged user base — which is the shape of a consumer product that found demand without finding a way to carry its own legal risk.
That risk is concrete. The company faces a lawsuit brought by the mother of a 14-year-old boy who died by suicide after becoming fixated on a chatbot, and Texas has investigated it over child safety.
One person has already moved. Karandeep Anand, Character.AI’s former chief executive, recently became Disney’s first chief technology officer.
What a stalking horse means here
Disney’s offer is a stalking horse bid. In a Chapter 11 sale that means it sets the floor: the terms are filed with the court, other buyers may bid above them, and the court approves the winner. Another company could still outbid Disney for the assets.
The employment offers sit beside that rather than inside it. Hiring the team is not the same transaction as buying the assets, and a rival bidder who won the assets would be buying them from a company whose engineers had already gone to Disney.
What to watch
Whether a competing bid appears before the sale hearing, and whether the court approves Disney’s terms as filed. The second thing is what Disney does with a character-chat product under its own brand, given that the liabilities named in the filing are the kind that attach to the product rather than to the corporate entity holding it.
