In the bankrupt chatbot company's sale, Disney has agreed to offer jobs to at least 60 employees with about $60 million in estimated annual compensation, on top of a $20 million bid for some assets and a technology license, according to a court filing. The bid sets a floor that others can top.
In Character.AI's bankruptcy, the most valuable thing for sale appears to be the people.
Walt Disney has agreed to make employment offers to at least 60 Character.AI employees, with estimated annual compensation of about $60 million, according to a court filing in the company's Chapter 11 case first reported by Bloomberg. The vast majority of those offered jobs have accepted. That is in addition to Disney's earlier agreement to pay $20 million for a perpetual, non-exclusive license to some of Character.AI's intellectual property and certain claims, plus transition services.
Disney's arrangement is a stalking-horse bid, setting a floor in a court-supervised auction. Another company could still come forward with a higher offer.
The arithmetic
The estimated annual payroll for the employees Disney would hire is about three times the $20 million it would pay for the assets, by this publication's arithmetic. Put another way, Disney is offering more each year to the staff than it is offering once for the technology.
That ratio is common in AI deals that are about talent as much as technology. Large companies have spent heavily to hire teams from AI startups, sometimes through licensing deals that leave the startup itself as a shell. Character.AI is an example of what can happen afterward. Google paid $2.7 billion in 2024 to license its models and rehire its founders. Two years later, the remaining company filed for bankruptcy with assets and liabilities each estimated at $50 million to $100 million.
Who gets what
For creditors, the employment offers do not add to the pot. Compensation paid to employees who join Disney goes to those employees, not to the bankruptcy estate. What creditors receive depends on the asset sale and any higher bids.
Recoveries for equity holders, who stand behind creditors, have not been disclosed.
For Disney, with a market value of about $191 billion, the deal is small. It gains a team experienced in building conversational AI products and a license to technology it can use, at a cost that is modest relative to its size.
Market implications
One reading is that this is an efficient way for a large company to acquire AI capability. Buying assets cheaply out of bankruptcy and hiring the team separately avoids the risks of a full acquisition, including the legal liabilities that contributed to Character.AI's bankruptcy.
A second reading is that the case shows how little is left for investors in AI startups once their core talent and technology are licensed away. If the value walks out the door with the employees, the equity left behind may be worth little in a downturn.
What to watch
The Nov. 20 bid deadline and any competing offers; a possible auction on Nov. 23 and the sale hearing on Nov. 24; how many employees accept Disney's offers; and whether the platform keeps operating or is wound down. A higher bid that preserves the platform would test whether the business has value beyond its staff.