Lionel LLC Back On Track

Washington, DC: (Mar-31-08) MTH Electric Trains brought a lawsuit against now bankrupt Lionel LLC, alleging that the company breached a trade-secrets pact and that it infringed a patented smoke-puffing technology that belonged to MTH. Records reveal that the two companies have resolved the dispute and entered into a settlement agreement, after a jury awarded rival MTH Electric Trains $38.6 million in the trade-secrets dispute with Lionel. The settlement is said to have forced the 107-year-old company into bankruptcy.

In a recent move, company officials claimed that a bankruptcy judge has approved Lionel LLC's Chapter 11 reorganization plan, clearing the way for the iconic model-train maker to exit bankruptcy. The exit from bankruptcy will call for the company to pay all its creditors in full with interest.

Recent filings showed that Lionel agreed to pay MTH $12 million in cash to settle the lawsuit and a separate spat involving patented smoke-puffing technology. Additionally, Lionel will also obtain up to $40 million in loans to fund its exit from Chapter 11, pay off its creditors and fund its working capital needs in the future. [MSN MONEY: LIONEL SET TO EXIT BANKRUPTCY]

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Published on Apr-1-08