Credit: Jasimine Blaser on Unsplash
Disney expects to spend about $180m over three years on the Character.AI staff it is hiring, a bankruptcy court filing shows. The sum covers pay and retention. Character Technologies, which runs the chatbot platform, filed the papers in Delaware on 13 October. It had sought Chapter 11 protection the day before.
Bloomberg first reported the employee terms on Friday. They come from the deal sheet that Character.AI and Disney signed on 18 September. The filing includes it as an exhibit.
The pay package
Under that deal, up to six key employees, including the chief executive, had to accept jobs at Disney. Disney also agreed to offer jobs to at least 60 more. It estimates the yearly pay of about 65 of these employees at roughly $60m, including salary, bonus and Disney stock.
Disney will also fund a $30m retention pool. Staff who stay receive part of it on the first and second anniversaries of the deal. The “vast majority” of the employees offered roles at Disney accepted them, the filing says.
The filing describes “mounting employee attrition” at Character.AI before the deal. It says the market for AI talent is extremely competitive. Meanwhile, the value of Character.AI’s equity had become uncertain and its cash was running short.
A sale inside Chapter 11
Disney is the first bidder for a permanent licence to Character.AI’s technology, at $20m, as TNW reported last week. The filing shows Disney paid $7.5m of that before the bankruptcy, including a $2m refundable deposit.
The filing says Disney also set a condition, citing Character.AI’s shrinking cash and its litigation and regulatory risks.
“Disney required that the transaction be fully consummated in a chapter 11 sale process.” Character Technologies, in its court filing
Disney takes on none of the company’s liabilities. Character.AI is asking the court to approve the sale free of successor liability claims.
The licence covers Character.AI’s training systems and safety tools. Among them are its age prediction model and its trust and safety moderation stack. It excludes finished models, user data, training data and the Character.AI brand.
Character.AI began looking for a buyer in August 2025. Its bank approached about 28 parties, the filing says. They found the product and users impressive, but said the legal risk was too high.
“The litigation and regulatory overhang on Character was too great.” Character Technologies, in its court filing
What happens next
Rival bids are due by 20 November. If any arrive, an auction will follow on 23 November, with a sale hearing on 24 November. If Disney loses, the winning bidder may interview up to 80% of the staff Disney took on and make them offers. If no buyer emerges or the court rejects the deal, Character.AI will wind down the platform.
Disney hired Karandeep Anand, Character.AI’s former chief executive, as its first chief technology officer in September.
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