A once-mighty Indianapolis-based developer laid low by the credit crisis has reached a deal that will allow an affiliate to exit bankruptcy and retain control of most of its properties.

Attorneys for an affiliate of Lauth Group Inc. on Wednesday filed details of a settlement with Chicago-based Inland American Real Estate Trust in U.S. District Court for the Southern District of Indiana.

The parties had been feuding for almost two years over Inland's 2007 investment of $228 million in dozens of Lauth properties. Lauth defaulted on its agreement to pay dividends to Inland in late 2008, and multiple Lauth subsidiaries—representing about 60 properties—filed for Chapter 11 bankruptcy reorganization in May 2009.

Under the deal, Lauth will turn over control of six properties with about 700,000 square feet, pay Inland $1 million and cooperate to ensure an orderly transition of books and records, court filings show.

The properties Lauth is ceding control of include its former headquarters in Meridian Corporate Plaza, a Class-A office complex just north of Interstate 465 between Meridian Street and College Avenue. Other properties are in Illinois, South Carolina and Florida.

Meantime, a Lauth affiliate called Lauth Investment Properties LLC will retain 37 properties with a total of 5.1 million square feet of space, along with 20 development parcels with more than 1,000 total acres.

The parties reached the agreement with the help of a special mediator, achieving a result "in the best interest of the debtors and their estates," the filing says.

"Such a result greatly enhances the prospects for success in these Chapter 11 cases, reduces the overall administrative costs, thereby preserving the value of the debtors' estates," the filing says. "Consequently, if the settlement, which has been negotiated over the course of several months, is not approved, the parties likely will continue to litigate for the foreseeable future."

The court is expected to formally approve the settlement later this month, paving the way for the Lauth affiliate to exit bankruptcy.

"We are very pleased with the terms of the settlement and we are glad to finally put this process behind us," CEO Bob Lauth said in a prepared statement. "We can now focus 100 percent of our time on maximizing the value of this large portfolio of 'Class A' properties and providing exceptional value to our clients."

Lauth’s troubles began in early 2008 as demand dried up for the office, industrial and retail developments that had fueled its rapid growth. The company doubled its revenue from 2004 to 2005, then doubled it again from 2005 to 2006. During the same period, the value of Lauth’s project lineup jumped from $143 million to $592 million.

The company started 2008 with about 450 employees, but layoffs shrunk the staff to fewer than 40 in April.

Lauth Group still controls local office space at Intech Park and Clay Terrace, and its website lists 49,000 square feet of available space in the building it still controls at Meridian Corporate Park.