AI News · The messy stuff ·
Disney to offer jobs to at least 60 Character.AI staff in bankruptcy deal
A legal filing shows Disney agreed to make job offers to at least 60 Character.AI employees, the majority of the bankrupt chatbot startup's workforce, with an estimated $60 million in annual compensation. Disney had already agreed to buy some Character.AI assets for $20 million in a stalking horse bid that a rival could still top.
Key points
- Disney will offer jobs to at least 60 Character.AI employees, the majority of its workforce.
- The offers total an estimated $60 million in annual compensation, according to a court filing.
- Disney's $20 million asset deal is a stalking horse bid that others could still beat.
What happened: Disney agreed to make employment offers to at least 60 Character.AI employees, the majority of the chatbot startup's workforce, according to a legal filing spotted by Bloomberg and reported by TechCrunch. Character.AI filed for bankruptcy earlier in the week.
The details: The offers carry an estimated $60 million in annual compensation, and the filing says the "vast majority" of employees offered jobs accepted them. Character.AI had previously said Disney agreed to acquire some of its assets for $20 million. The arrangement is a stalking horse bid, which means another company could still come forward with a higher offer. Character.AI's former CEO, Karandeep Anand, recently became Disney's first CTO.
Background: The filing says that despite its "large and engaged user base," Character.AI was hindered by high costs and by potential liabilities tied to litigation and regulatory engagement. The company was sued by the mother of a 14-year-old boy who said her son became obsessed with one of its chatbots before his suicide. It also faces government investigations over child safety, including one by the Texas attorney general.
What to watch: Whether a rival bidder emerges before the asset sale is completed. How Disney plans to use the Character.AI team and technology was not reported.
Our take
The collapse shows how litigation and safety liabilities can sink a consumer AI product, a risk worth checking before building on a smaller vendor.