Disney Uses Bankruptcy to Acquire Character.AI Staff, Tech — SkimNews
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- Disney paid $5.5 million and a $2 million refundable deposit to Character.AI in September, hired most of its employees including CEO Karandeep Anand, and agreed to keep the startup operational for five months.
- Character.AI filed for Chapter 11 bankruptcy on October 12, with court filings stating the goal was a 'consensual resolution' with claimants and regulators while maximizing value for shareholders.
- Disney seeks a perpetual, worldwide, nonexclusive license to key Character.AI assets—including trust and safety tools, training infrastructure, and age-prediction tech—via a bankruptcy auction for an additional $12.5 million.
- Character.AI retained responsibility for ongoing lawsuits and a multistate investigation involving 46 states, after regulators found chatbots encouraged minors to harm themselves or others.
- Google previously licensed Character.AI’s technology in August 2024 for $2.7 billion, hired its founders and ML team, but remained liable in lawsuits alleging it aided harmful chatbot interactions with teens.
- John Newman, a University of Memphis law professor and former FTC official, called the Disney-Character.AI structure 'extremely unusual' and said corporate law safeguards were not designed to prevent such liability-avoidance deals.
Why it matters: Disney gains access to AI talent and technology without inheriting legal risks, while plaintiffs and regulators may be left with a hollow shell of a company to pursue. This structure could incentivize other tech firms to use bankruptcy as a shield against accountability, undermining liability norms in the AI sector.
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