Bankrupt model train maker Lionel LLC has reached an agreement to settle a long-time legal battle with rival Mike's Train House Inc (MTH), according to court documents filed this week. The settlement is contingent upon Lionel's bankruptcy plan, but would remove a major obstacle as the company tries to emerge from bankruptcy protection by the end of this year.
Lionel, based in Chesterfield, Michigan and 20 percent owned by singer Neil Young, began making electric trains in 1900 and at one time was the world's largest toy company.
Lionel was forced to file for bankruptcy protection in 2004 after a court ruled against it for the alleged misappropriation of MTH's train designs by a subcontractor. Lionel had been appealing the judgement while under bankruptcy protection.
This week, the documents, filed in the Bankruptcy Court of the Southern District of New York this week, revealed the two companies had reached a settlement agreement on October 12. Lionel said in the papers the agreement would help it obtain new financing in order to exit bankruptcy, because it resolves one of the largest claims against the company.