Court Filings: Disney Seeks Character.AI Tech and Staff via Bankruptcy, Insulating Itself from Liability

According to Wired, U.S. federal court filings indicate that entertainment giant Disney is engaged in a complex two-part transaction with struggling AI chatbot startup Character.AI, designed to acquire talent and technology while avoiding the company's growing legal liabilities. This arrangement represents a new twist on what some have dubbed a "reverse acquihire," where a buyer orchestrates deals to hire key employees and obtain broad technology licenses, leaving the target as a husk responsible only for its debts and lawsuits.

The first part of the deal occurred in September, where Disney paid Character.AI $5.5 million plus a refundable $2 million good-faith deposit and hired the majority of its employees, including former CEO Karandeep Anand. In exchange, some newly hired Disney employees agreed to help keep Character.AI operational for five months. The second part relies on Character.AI's Chapter 11 bankruptcy filing on October 12. Through this process, Disney seeks a perpetual, worldwide, non-exclusive license to a wide range of Character.AI's code, documentation, and tools, including its trust-and-safety moderation stack, training infrastructure, and age-prediction technology.

This license will be auctioned off in the coming months. If Disney is selected as the winning bidder by Character.AI and a committee of unsecured creditors—and approved by the courts—it has agreed to pay an additional $12.5 million at closing. If not selected, Disney receives its deposit back plus a breakup fee. Additionally, Disney has drafted a "363 Free and Clear Order" intended to clarify that this process is not a merger and that Character.AI remains solely responsible for all existing liabilities and legal claims.