Disney plans $180 million for Character.AI's team as the startup goes bankrupt

The numbers come from a binding term sheet filed on October 13 in the US Bankruptcy Court for the District of Delaware. PPC Land, which read the filing, reports it was attached to Character Technologies' motion to set rules for selling its assets. Character Technologies is the company behind the Character.AI app, and its case number is 26-11603.

The term sheet spells out the people side of the deal:

• Key hires: up to six employees, one of them the chief executive, had to accept Disney offers within ten days of a September 18 agreement.
• Everyone else: Disney would offer jobs to at least 60 more employees, at its own pay levels for salary, bonus and Disney stock.
• Annual pay: "Disney estimates the annual run rate total compensation of the Offered Employees to be approximately US$60 million," based on about 65 people.
• Retention: a $30 million pool, paid on the first and second anniversaries, for workers who stay.
• Total: "approximately US$ 180 million" over years one to three.

PPC Land worked out that the $60 million averages roughly $923,000 per person per year. That's its own math, not a number in the filing,, and PPC Land notes it masks a wide spread between the chief executive and junior staff.

The pay goes directly to the employees and "will not constitute consideration payable to the Company," so Character.AI's creditors can claim the $20 million, not the $180 million.

Earlier filings described 66 of the company's 86 employees leaving for Disney, PPC Land reports. That leaves about 18 people at Character.AI.

Business Insider, as cited by Benzinga, reports that 56 of the 66 have already resigned from Character.AI. The other 10 are waiting on US work visa updates.

The biggest name moved first. On September 18, Disney announced that Character.AI CEO Karandeep Anand would become its first company-wide Chief Technology Officer, effective October 2. He reports to CEO Josh D'Amaro and oversees technology, data and AI platforms, product and engineering. Disney's announcement also said "a number of Character.AI's technical team are expected to join Disney."

Anand's résumé, per Disney:

• Brex: President and Chief Product Officer.
• Meta: several roles at Facebook, most recently Vice President of Ads and Business Products.
• Microsoft: 15 years, including on the team that built Azure.

Not the company. Disney is the "stalking horse" bidder: it sets a floor price, and anyone can try to beat it.

For $20 million, Disney gets a non-exclusive license to Character.AI's technology. The filing lists 25 areas of code and tools, PPC Land reports, including:

• Training: the post-training stack, training recipes, a reward model and evaluation tools.
• Safety: a model safety stack, moderation tools, red-teaming frameworks and "Guardian," a monitor for safety over long conversations.
• Age checks: an age prediction model, including its training code.
• Serving: the systems that route models and manage GPU clusters.
• Media: a stack for generating images and video.

It also covers nine patents, four of them already granted in the US. One covers ways to make large language models cheaper to run, which matters a lot for a free chat app with heavy use.

In real life Think of it like a restaurant closing. Disney hired most of the kitchen and photocopied the recipe book. The restaurant's name, its building and its list of regular customers are still up for sale.

A lot. The license excludes the Character.AI app, the brand, the website and domains, and the social media accounts, according to the filing.

It also excludes user data, any personal information, everything users typed and everything the app wrote back. Training data and the finished chat models stay behind too. In the term sheet's words, Disney "will not acquire or operate the Company's consumer-facing platform."

Character.AI has told the court it has had about 163 million current and past users. Their accounts and conversations remain in the bankruptcy estate.

The catch: because the license is non-exclusive, Character.AI keeps the original code and can sell or license it to another buyer. Disney keeps its permanent copy either way.

In three pieces, according to the agreement PPC Land describes:

• September 18: $5.5 million up front, non-refundable in all cases.
• Same day: a $2 million deposit, refundable if Disney loses the auction or the deal hasn't closed by December 17, 2026.
• At closing: the remaining $12.5 million.

If a rival wins, Disney gets its $2 million deposit back plus up to $700,000 in bid protections. Character.AI keeps the $5.5 million.

Character.AI also gave up a few things to make the hiring work. It waived notice periods, agreed not to enforce non-compete or confidentiality terms that would block the move, and won't try to rehire those workers for three years.

Character.AI let people chat with AI characters, from fictional heroes to custom personas. It grew fast, and its founders went to Google in 2024 as part of a $2.7 billion licensing deal.

The company then faced lawsuits from families who alleged their teenagers harmed themselves or died by suicide after using its chatbots, Benzinga reports. The startup and Google settled several child safety cases earlier this year. Questions about AI chatbots and kids are now a fight across many states, as in the eight state lawsuits against OpenAI filed this week.

Disney and Character.AI also have history. Disney sent a cease-and-desist letter in September 2025 over chatbots using its characters, WDW News Today reports. Character.AI removed the characters named in the letter.

The big picture: this is the second time a giant has hired Character.AI's talent without buying the company. Google did it with the founders. Disney is now doing it with most of the remaining staff, this time inside Chapter 11.

Benzinga reports the hiring came about two weeks after Disney laid off several hundred workers, including some tech staff. That was the third major layoff round since D'Amaro became CEO in mid-March.

WDW News Today adds that Disney's legal and global affairs group was also told in September that it would get smaller.

Disney's own explanation for the hire is about strategy. Its announcement says D'Amaro is "sharpening Disney's focus on technology as a driver of growth," with Disney+ as the digital centerpiece.

What's next: the deal still needs the court.

• Around October 26: Character.AI asked for a hearing on its bidding rules, citing "limited liquidity and substantial monthly cash burn."
• November 20: competing bids are due, according to Benzinga.
• Late November or early December: a sale could close, subject to court approval.

If no other buyer steps in, Disney's deal goes ahead and the app is expected to shut down, PPC Land reports.

• If you use Character.AI: the app still runs for now, staffed partly by people Disney hired. A shutdown is possible after the auction, so save anything you care about.
• Your chats are not going to Disney: user data and conversations are excluded from its deal. What a future buyer could do with them isn't settled in the filing.
• For Disney fans: Disney now has a team and code built for AI characters at huge scale. The company hasn't said what it will build.