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DeLorean Motor Settlement Said to Be Near

May 31, 2000|From Reuters

DETROIT — The 18-year-old bankruptcy case of DeLorean Motor Co., maker of the famed DeLorean gull-winged sports car that later collapsed amid fraud and money-laundering charges, is close to being settled, the case's trustee said Tuesday.

Detroit attorney David Allard said 90% of the remaining $18 million in payments are being made to creditors of the company, which filed for Chapter 11 bankruptcy court protection in 1982. The case, filed in U.S. Bankruptcy Court in Detroit, was converted to a Chapter 7 filing in 1983.

John DeLorean was a star General Motors Corp. engineer, credited with developing the Pontiac GTO. He left the No. 1 auto maker in 1973 to set up his own auto company in Belfast, Northern Ireland, with financial help from the British government.

However, few buyers could afford the $25,000 stainless steel sports cars, later made famous in the movie "Back to the Future." The company made 8,500 cars before it folded.

DeLorean was arrested in a Los Angeles hotel room in October 1982 after police said he had picked up 220 pounds of cocaine that were allegedly part of a $24-million deal to save his car company.

A California jury later acquitted DeLorean of conspiracy to possess and distribute cocaine.

Last May, accounting firm Arthur Andersen agreed to pay $27.75 million as part of a settlement with bankruptcy trustee Allard.

The settlement stemmed from a March 1998 jury verdict in New York State Supreme Court that the accounting firm had approved DeLorean Motor financial statements even though there were indications of fraud. The jury ordered the accounting firm to pay $46.2 million. Arthur Andersen asked the court to set the verdict aside, then settled the case.

DeLorean, 75, filed for personal bankruptcy in September.

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