Bankruptcy court approves deal between Visteon and L & H

by Todd R. Weiss

April 18, 2001 —

A federal bankruptcy court judge yesterday approved the proposed sale of speech recognition technology from beleaguered software vendor Lernout & Hauspie Speech Products NV (L&H) to automotive supplier Visteon Corp., enabling the two companies to settle a five-month-old legal battle.

L&H announced that Dearborn, Mich.-based Visteon has dropped all of the claims it made against the software vendor in a lawsuit filed last October. As part of the settlement deal approved by the U.S. Bankruptcy Court for the District of Delaware, Visteon will buy L&H's C-REC technology for $13.1 million.

In a related matter, the bankruptcy court yesterday also denied a motion filed by the former owners of L&H subsidiary Dragon Systems Inc. in an attempt to block the technology sale to Visteon. The former owners, James and Janet Baker, had asked the court to appoint a trustee in the case and to disqualify the attorneys representing L&H.

The C-REC software was originally developed by Dragon Systems, which was acquired by Belgium-based L&H last year before the latter company's financial problems came to light. Dragon Systems customized the software for Visteon, the world's second-largest maker of automotive parts and supplies, under a 1997 contract.

A Visteon spokeswoman today said the company isn't commenting on how it will use the C-REC technology because the deal hasn't been finalized yet. Visteon already offers speech recognition technology that's used in Jaquar S-Type and Infiniti Q45 automobiles to allow drivers to control radios, telephones, climate controls and other features through voice commands, she said.

An L&H spokeswoman also declined to comment on yesterday's developments. Visteon and L&H had set up a joint venture last April, saying they planned to develop a set of integrated speech and technology products aimed at users in the automotive industry.

But Visteon, which had $19.5 billion in revenue last year, claimed in its lawsuit that L&H had reneged on the joint venture deal by failing to meet the terms of the agreement between the two companies. The two companies proposed the settlement and technology sale last week.

L&H, which is being investigated by the U.S. Securities and Exchange Commission and is operating under bankruptcy protection both in the U.S. and in Belgium, initially said Visteon's action was "a legalistic and unproductive" move that lacked merit. Officials at L&H's U.S. headquarters in Burlington, Mass., weren't available for comment this morning.

Computerworld