Character.AI's bankruptcy may not leave most of its employees out of work, with Disney agreeing to offer jobs to at least 60 members of the chatbot startup's team, according to a legal filing reported by Bloomberg. The development comes just days after Character.AI filed for bankruptcy earlier this week.
The filing states that Disney's offers cover more than half of Character.AI's workforce. The combined annual salaries for these positions are estimated at $60 million, and the “vast majority” of employees who received offers have already accepted them.
Character.AI had earlier said that Disney agreed to acquire some of its assets for $20 million. The estimated annual payroll for the employees being hired is therefore three times the value of the asset deal.
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Deal Isn't Final Yet
The agreement isn't locked in. Disney's offer is a stalking horse bid, an initial bid that sets the minimum price for a company's assets in a bankruptcy sale. If a rival bidder offers more, Disney's arrangement could be overtaken, so the outcome remains open.
A Familiar Face at Disney
The deal comes shortly after Karandeep Anand, Character.AI's former CEO, joined Disney as its first-ever chief technology officer. Disney had once accused Character.AI of copying its characters.
Why Character.AI Struggled
Character.AI, an interactive chatbot platform, filed for bankruptcy just five years after it started. The filing says the company still had a “large and engaged user base.” However, it says Character.AI had been weighed down by high costs, along with “potential litigation-related liabilities and regulatory engagement.”
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The startup has faced legal and regulatory pressure in recent years. A mother filed a lawsuit against Character.AI, saying her 14-year-old son had become obsessed with a chatbot on the platform before he died by suicide. The company has also been the subject of government investigations over child safety concerns.
What Happens Next
For now, Disney's offer gives most Character.AI employees a path forward after the bankruptcy. Whether the deal goes through as planned depends on whether any other bidder comes forward with a higher offer for the company's assets.
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