Disney agreed to offer jobs to at least 60 Character.AI employees, with combined annual pay estimated at roughly $60M, according to a Delaware bankruptcy filing.
Character Technologies, which operates the chatbot platform, sought Chapter 11 protection on Oct. 12 and filed the papers the next day.
The terms come from a deal sheet the two companies signed on Sept. 18, included as an exhibit.
The deal required as many as six senior employees, including the CEO, to take positions at Disney. The compensation estimate accounts for salaries, bonuses, and equity awards for roughly 65 employees.
Disney will also fund a $30M retention pool, paid out on the first and second anniversaries of the deal.
Over three years, the company expects to spend about $180M on pay and retention for the group. The filing says the vast majority of employees offered roles accepted them.
Disney's Character.AI deal costs (per court filing, Oct. 13, 2026)
Bar chart. Amount (USD millions). Annual pay: Cost (USD Millions) $60. Retention pool: Cost (USD Millions) $30. Stalking-horse bid: Cost (USD Millions) $20. Pre-bankruptcy payments: Cost (USD Millions) $7.5.
Disney gets the code without the lawsuits
Separately, Disney is the stalking-horse bidder at $20M for a non-exclusive perpetual license to Character.AI's training, safety, and serving code, plus nine patents.
The license covers tools including an age prediction model and a trust and safety moderation stack.
It excludes the app, brand, domains, user data, chat logs, training data, and finished models, all of which stay with the estate.
Those liabilities are substantial. A mother sued the startup after her 14-year-old son died by suicide following an obsession with one of its chatbots, and government investigations over child safety followed.
Disney itself accused Character.AI in September 2025 of copying characters from Frozen, Star Wars, and Marvel.
Character.AI's bank approached about 28 parties starting in August 2025. Buyers liked the product and the users, but balked at the legal exposure.
"The litigation and regulatory overhang on Character was too great."
Character Technologies, court filing
The reverse acquihire goes to bankruptcy court
Ars Technica calls the structure a reverse acquihire, a chain of deals that moves the team and the technology while leaving the shell behind.
Companies often argue these arrangements aren't mergers requiring antitrust notification, a position that has drawn criticism in Congress.
Disney paid $7.5M of its bid before the filing, including a $2M refundable deposit. Rival bids are due by Nov. 20, with an auction on Nov. 23 and a sale hearing the following day.
If another bidder wins, it can interview up to 80% of the employees who joined Disney and decide which ones to hire.
If no buyer emerges, the platform winds down.
Former Character.AI chief executive Karandeep Anand became Disney's first chief technology officer in September, and the broader hiring deal points his old engineering bench at the same organization.
For Disney, which announced a three-year agreement with OpenAI in December 2025, the deal buys conversational AI expertise at a fixed annual cost.
