Note: This is about the MTH vs Lionel lawsuits, not any Lionel vs MTH lawsuits. It is also about Lionel coming out of bankrupcy, which they cannot do until the lawsuits are settled.
- 10-12-07 Lionel and MTH Making Progress in the Trade Secrets Case, But Its Not Done Yet
http://ogaugerr.infopop.cc/eve/forums/a/tpc/f/57660482/m/1291055054?r=1291055054#1291055054 - 10-25-07 Current Status of the MTH Lionel Lawsuits Settlement
http://ogaugerr.infopop.cc/eve/forums/a/tpc/f/57660482/m/5591084154?r=5591084154#5591084154
The following is a newspaper article from the Houston Chronicle dated 10-26-07.
Lionel, MTH Near Deal in Toy-Train Rift
Houston Chronicle
Oct. 26, 2007
© 2007 The Associated Press
WASHINGTON — Lionel LLC has reached a tentative deal with rival MTH Electric Trains to settle a long-running trade-secrets battle and to put the 107-year-old model train maker on track to exit bankruptcy by early next year, the companies said Friday.
The proposed deal, whose terms were not released, comes nearly three years after MTH's $38.6 million judgment against Lionel in a trade-secrets lawsuit forced its bigger rival into bankruptcy.
Pending approval, the deal would resolve "all MTH claims" against Lionel, Lionel said.
MTH has said Lionel owes it about $88 million, including $38.6 million awarded in 2004 after Lionel was found to have appropriated its rival's trade secrets. MTH also sued Lionel for $17.5 million for allegedly using its patented smoke-puffing technology and using it in its own Smart Smoke system for model steam engines.
"We're happy its over, it's been large drain on everyone involved," said Lionel Chief Executive Jerry Calabrese.
But Mike Wolf, founder of Columbia, Md.-based MTH cautioned that the settlement, which is contingent on Lionel raising new financing to fund its reorganization plan, among other requirements, could still be derailed.
"It's not a done deal, even though the monetary part has been finalized," said Wolf. "It could still blow apart."
Neither Wolf nor Calabrese would disclose the terms of the settlement. But in court papers, MTH has said the only thing holding up a settlement was a spat over the future use of certain model-train technology. Although MTH doesn't enjoy Lionel's brand recognition, the smaller company believes it has superior technology.
MTH previously proposed a $25 million settlement of its claims against Lionel. But last week, MTH's bankruptcy lawyer backed off that figure.
The settlement comes as Lionel moves closer to emerging from Chapter 11 protection.
On Thursday, Judge Burton R. Lifland of the U.S. Bankruptcy Court in Manhattan approved the outline of Lionel's reorganization plan, paving the way for the company to send its proposal to creditors for voting.
Lifland scheduled a confirmation hearing for Jan. 31 on the plan.
Calabrese said he's confident in the model-train maker's ability to obtain financing for its Chapter 11 plan.
"The only reason the company has been in bankruptcy for the past two years is this lawsuit," said Calabrese. "I think the business itself is the healthiest part of this deal, and we won't have any trouble raising the financing."
In 2000, MTH, then known as Mike's Train House, sued Lionel after its South Korean supplier reportedly stole some of MTH's train designs. In 2004, a Michigan jury awarded MTH $38.6 million, forcing Lionel to file for bankruptcy later that year.
But in late 2006, a panel of judges from the 6th U.S. Circuit Court of Appeals overturned the verdict and ordered a new trial.
Lionel's proposal to emerge from Chapter 11 would pay creditors in full and pay MTH's claim in cash, as long as Lionel receives bankruptcy-exit financing, and the plan is confirmed and a final resolution of the disputed claims is reached.
Lionel recently pegged its value upon exiting Chapter 11 at about $100 million.
The privately held Lionel, based in Chesterfield, Mich., is owned by the estate of former Paramount Communications Inc. chairman Martin Davis and rock musician Neil Young. Ex-Lionel owner Richard P. Kughn owns a 5 percent stake in the company.