Disney to Hire Majority of Character.AI Staff After Chatbot Startup Files for Bankruptcy

Disney has agreed to make employment offers to at least 60 employees of Character.AI — the majority of the chatbot startup’s workforce — following the company’s bankruptcy filing earlier this week in October 2026.

A legal filing spotted by Bloomberg revealed the terms of the agreement, with Disney committing to pay those employees an estimated $60 million in annual compensation. According to the filing, the “vast majority” of Character.AI employees who received offers accepted them.

The deal has a notable connection at the executive level: Character.AI’s former CEO, Karandeep Anand, recently joined Disney as the company’s first Chief Technology Officer. Disney had also previously agreed to acquire some of Character.AI’s assets for $20 million. Because the arrangement is structured as a stalking horse bid, another company could still come forward with a competing offer.

Character.AI’s collapse stems from a combination of financial and legal pressures. The filing cited high operating costs and “potential litigation-related liabilities and regulatory engagement” as key factors, despite the platform maintaining a “large and engaged user base.” The company faces a lawsuit from the mother of a 14-year-old boy who alleged her son became obsessed with one of Character.AI’s chatbots before taking his own life. The startup also faces government investigations related to child safety concerns.

The bankruptcy and subsequent talent acquisition by Disney marks a significant end for Character.AI, which had attracted millions of users to its AI-powered character chatbot platform. For the employees involved, Disney’s offer provides a path forward — though the final shape of the deal remains subject to any competing bids that may emerge through the bankruptcy process.