alt Hacker News> compensated as [...] shareholders.
Don't all shares / options go to zero in Chapter 11, or is that only true in Chapter 7 when the lenders take over?
In any case, I'm not sure Character.ai's assets will be worth much or that the employees will have any sort of liquidation preference.
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They were likely paid out at the same time other investors were when Noam et al went to Google.
The fact that the legal entity has no money doesn't mean they didn't get paid.
You can figure out a bit about what likely happened by what is not happening. NVIDIA/Groq are being sued for leaving former employees out of the acquisition: https://www.cnbc.com/2026/10/05/nvidia-groq-deal-stockholder...
Which to me implies that in that case, at least current employees were taken care of, and the court will likely force the former employees to also be taken care of because Delaware law doesn't like it when you discriminate in ways that were not spelled out ahead of time.
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Equity holders have a more junior claim than debt holders, but if there are enough dollars in the bankrupt company to make the debt holders whole, the equity holders get whatever is left over (obviously in order of seniority).