Liquidators of British merchant bank Barings settled out of court with the bank's former auditors today, avoiding a lengthy and costly lawsuit aimed at recouping £1 billion sterling.
Mr Charles Aldous, lawyer for liquidator Ernst & Young, told the High Court in Londonthat a provisional agreement had been reached with auditor Coopers & Lybrand. The confidential settlement needs court approval, which is expected by the end of July.
Ernst & Young issued a brief statement confirming the deal, but another action involving fellow auditor Deloitte & Touche is continuing. These claims are due in court in October.
Ernst & Young, acting for Barings bondholders, had alleged the collapsed bank's auditors were negligent in failing to police the activities of Nick Leeson, the Barings trader whose trading losses brought down Britain's oldest merchant bank in 1995.
One of London's largest court rooms had been set aside for the lawsuit, which was expected to produce record amounts of paperwork and employ an army of top lawyers.
But hopes of a settlement rose when both sides asked the judge to postpone the start of the case to Thursday from Monday.
In a statement on Thursday, Ernst & Young said: The parties to the action, excluding Deloitte and Touche, today supported an application to the court for an adjournment of the action to allow documentation of an agreement which has been reached in principle between those parties.
Leeson was released early from prison in Singapore, partly to recover from colon cancer. Leeson is now at university studying for a degree in psychology.