Disney Plans $60 Million Annual Pay for 66 Character.AI Hires Amid Bankruptcy
Character.AI had previously announced that Disney had agreed to acquire certain assets for $20 million.
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Disney plans to spend about $60 million a year on compensation for employees recruited from bankrupt AI chatbot startup Character.AI, according to court filings that show 66 workers accepted job offers from the entertainment company.
The proposed employment arrangements include a $30 million retention pool. Disney estimates total compensation and retention spending for the group at about $180 million over three years, according to documents filed in a US bankruptcy court in Delaware.
Disney has already brought Character.AI’s former CEO, Karandeep Anand, on board as its first chief technology officer. Anand is expected to lead efforts to modernize how Disney develops and delivers technology across the company.
The move comes as Character.AI, despite attracting around 12 million active users, struggles to sustain its business amid high computing costs, expensive AI talent, and mounting legal challenges.
Character.AI had previously announced that Disney had agreed to acquire certain assets for $20 million. Under the proposed arrangement, Disney would serve as the “stalking-horse” bidder for a nonexclusive, perpetual license to Character.AI’s intellectual property.
A stalking-horse bid establishes an initial offer in a bankruptcy sale, but it does not guarantee that the assets will go to the first bidder. Other companies can submit higher offers.
According to Reuters, Character.AI expects the sale of its assets to close by late November or early December. Court documents put the company’s estimated assets and liabilities at between $50 million and $100 million.
Character.AI in Trouble
Founded in 2021 by two former Google employees, Character.AI built a platform that allows users to interact with AI-generated characters and chatbots. In 2024, Google licensed the startup’s technology and rehired its founders.
Despite its sizeable and engaged user base, the company has struggled to turn its popularity into a profitable business.
Character.AI’s financial troubles highlight the steep costs of building and operating AI-powered products at scale. Court documents indicate that the company has been losing approximately $8 million to $9 million every month, largely due to computing expenses and the cost of hiring AI talent.
The bankruptcy comes amid growing scrutiny over the safety of AI chatbots, particularly their impact on younger users.
Character.AI has faced lawsuits and government investigations over allegations that its chatbots could cause harm to children and vulnerable users. The mother of a 14-year-old boy sued the company in 2024, alleging that her son became obsessed with one of its chatbots before dying by suicide.
More recently, Kentucky alleged that Character.AI chatbots encouraged users to engage in self-harm, starve themselves, or take their own lives. Pennsylvania also sued the company, alleging that its chatbots posed as doctors.
The company has previously said it prioritizes user safety. It declined to comment on how the bankruptcy might affect the legal claims against it.
