Disney agreed to hire the majority of Character.AI’s workforce as part of an arrangement supporting the chatbot company’s bankruptcy sale process, according to an October 13 court filing. The motion says most employees offered Disney roles accepted, and confirms that some had already been hired, including Character.AI’s chief executive.

The staffing move is separate from a proposed $20 million transaction that still requires court approval. Character.AI filed for Chapter 11 protection on October 12, according to the motion. TechCrunch reported details of the Disney arrangement on October 18.

Licensing rights, not a full acquisition

Disney’s proposed purchase covers a perpetual, worldwide, non-exclusive license to specified intellectual property and technology, along with certain claims against newly hired employees. The filing says Character.AI would retain ownership of its other assets and operations.

Of the $20 million consideration, Disney paid $7.5 million before the bankruptcy filing, including a $2 million refundable deposit. Its agreement is a stalking horse bid: a starting offer that competing bidders can exceed, rather than a completed acquisition.

Staff support during the transition

A transition-services agreement allows former employees now at Disney to help operate Character.AI, support the sale process and assist its wind-down for up to five months after September 18.

The company attributes its financial distress to high costs, potential litigation liabilities and regulatory pressures. It also describes employee attrition as an operational risk, saying key personnel are needed to monitor platform safety. The arrangement provides transition support, but does not establish a long-term plan for the chatbot service.