Character.AI Files Bankruptcy; Disney Acqui-Hires Staff, Skips Lawsuits

Character.AI filed for bankruptcy protection in the U.S. and agreed to sell certain assets to Walt Disney for $20 million in a court-supervised process expected to close in late November or early December 2026. Disney is also hiring at least 60 Character.AI employees, described as the majority of the company, at an estimated $60 million in combined annual pay. Character.AI's former CEO Karandeep Anand had already become Disney's first CTO before the bankruptcy filing. CEO Colin Adams said the board determined the court-supervised sale was the best available option after a comprehensive review. The deal is structured as a stalking-horse bid, so another buyer could outbid Disney at the bankruptcy auction. Legal liabilities remain with the surviving Character.AI entity and do not transfer to Disney. Character Technologies, the U.S.-based owner, listed estimated assets and liabilities of $50 million to $100 million in court filings. The platform's services are continuing during the transition but would shut down if no buyer is found.