Disney asked Character.AI to declare bankruptcy to avoid legal liabilities, with the deal potentially acquiring most of its technology and staff.
Character.AI filed for chapter 11 bankruptcy on October 12, following a $5.5 million payment from Disney in September and the hiring of most of its staff, including CEO Karandeep Anand.
The deal involves two interrelated transactions, with Disney seeking a perpetual, worldwide, nonexclusive license for Character.AI’s code, frameworks, and tools, excluding user data and the website.
"The goal of the bankruptcy was to reach a 'consensual resolution' with personal injury claimants and a group of states investigating the company," said the newly appointed CEO of Character.AI in court filings.
Disney structured the deal to ensure it would not be viewed as a merger, with Character.AI retaining responsibility for ongoing legal claims and obligations.
Experts warn that the rapid transfer of employees between companies is unrealistic, and the deal's structure may not be easily undone.
Source: wired
