07.01.2009 — The creditors against LeisureTech Electronics (LTE) have settled with the company, paving the way for the "new" LTE to continue to espouse its A-BUS protocol for audio over Cat 5.

The settlement comes after LTE lost a lengthy legal battle against the Armour Group trying to uphold its A-BUS patent in the United Kingdom. Armour is also challenging LTE's European patent. LTE expects a decision to be made in October.

After the court ruled in favor of Armour in November 2008, the company was burdened with both its court costs, which were "several million dollars" according to the company, and Armour's court costs.

In a somewhat complex legal maneuver, LTE sold its assets on February 6, 2009 and then announced bankruptcy. Armour challenged the sale, which was made to the same executives of the previously existing LTE: Andrew Goldfinch and Jonathan Ritchie. Armour claimed the asset value placed on LTE was too low and asked for an independent audit.

According to Goldfinch, founder of LTE, the independent audit came in about 15 percent higher than the original audit.

"We put forth a proposal to the administrator to resolve the issues and it was accepted by Armour," says Goldfinch. He would not specify the amount, but the valuations are rumored to range between $1.6 million and $1.9 million. In addition to Armour, the other primary creditors were the Australian Taxation Office and Allen & Overy LLP, LTE’s UK lawyers.

LTE says the settlement "brings to an end any avenue for litigation relating to the sale of the business or against the directors of the company and any suggestion that regulatory authorities will be called on to reviews LeisureTech’s business or conduct."

"The whole situation was amazing," says Goldfinch, adding that he is still baffled by the UK court ruling against the patent. "Our licensees have been cautious during this whole proceeding. It's gone on for so long that all of them are reordering. With this resolution, I think it will be business as usual for LeisureTech and for our licensees."

LTE has 15 licensees, including Russound, Channel Vision, Jamo and Eaton.

"We had to defend our patent," says Goldfinch. "We tried to negotiate with Armour the whole time. I am still amazed that Armour did not come to the table. I estimate that the patent challenge cost Armour eight years worth of royalties."