A federal bankruptcy judge yesterday approved a settlement under which former auto magnate John Z. DeLorean will have to pay his creditors only $9.36 million of the $100 million-plus debt of his defunct sports car company.
The decision by U.S. Bankruptcy Judge Ray Reynolds Graves was a legal victory for DeLorean, 62, who was acquitted in federal court in Detroit late last year on 15 counts of fraud and racketeering connected with his company.
In ruling in favor of DeLorean, Graves said critics of the settlement had failed to prove that it was unfair and unreasonable. The judge also noted that it might be impossible for the creditors to collect a higher amount.
At a hearing before Graves on Aug. 3, DeLorean answered critics who charged that the proposed settlement in the 4-year-old case was not enough and that the amount was not backed by any collateral other than DeLorean's word.
The largest creditor is the British government, which paid for most of the DeLorean Motor Co. assembly plant in Northern Ireland. In addition to the British government, the settlement also was opposed by French carmaker Renault -- which supplied parts to DeLorean's company -- and two smaller creditors.