Disney found a way to buy Character.AI without buying its lawsuits
Summary
Character.AI, a chatbot platform, filed for bankruptcy as part of a deal allowing Disney to hire most of its employees and potentially acquire its technology. Disney structured the deal to avoid taking on Character.AI’s ongoing legal problems while gaining use of its software and tools through a license.Key Facts
- Character.AI declared bankruptcy to work out a resolution with legal claimants and regulators.
- The bankruptcy allowed Disney to hire most of Character.AI’s staff, including its CEO Karandeep Anand.
- Disney paid $5.5 million upfront plus a $2 million refundable deposit in September before bankruptcy filings.
- After bankruptcy, Disney aims to get a worldwide license to use Character.AI’s software and technology.
- The license excludes user data and Character.AI’s website.
- Disney may pay another $12.5 million if it wins the auction for the license during bankruptcy court proceedings.
- Character.AI remains responsible for its ongoing lawsuits and regulatory investigations.
- This deal is an example of a “reverse acquihire,” where a company buys a startup mainly for its employees and technology but leaves the startup’s legal issues behind.
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