Disney bid $20 million to license some of bankrupt Character.AI's code, while most of the startup's staff joined Disney. The app, its users and their chats are not part of the deal, and rival bids can still top it.
Character.AI filed for bankruptcy in Delaware on Monday, Oct 12, and Disney is the opening bidder. Disney Worldwide Services has agreed to pay $20 million for a permanent, non-exclusive license to some of the startup's technology and legal claims, according to the company's statement reported by Variety and Deadline. It is not buying the app, the brand, its users' data or their chats, which stay up for sale.
The people are the bigger purchase. Disney named Karandeep Anand, Character.AI's former chief executive, as its first chief technology officer last month. Court filings reported by PPC Land show 66 of the startup's 86 full-time staff have since accepted Disney jobs, with about $180 million set aside for their pay and retention over three years, nine times the bid itself. It is the second time a big company has taken Character.AI talent through a license deal, after Google's $2.7 billion agreement in 2024.
Rival bids are due Nov 20, with an auction on Nov 23 if the court approves the schedule, and any challenger has to open at $21.7 million. The filings do not say what Disney plans to build with the code.
In practice, talking versions of the world's biggest character library look set to be built inside Disney, by a team it now employs, rather than licensed out to someone else's app.
Source: Variety, Deadline, PPC Land (court filings), Oct 13, 2026.
