Platinum Software Settles Lawsuit for $17 Million : Courts: Shareholders will get $2 million in cash, $15 million in IOUs. Suit stemmed from O.C. firm’s overstated revenue.

Platinum Software Corp., the accounting software company whose bookkeeping practices got it into legal trouble, said Wednesday it has agreed to settle a class-action shareholder lawsuit for $17 million.

Under the agreement, Platinum would pay $2 million in cash and issue $15 million in corporate IOUs.

If approved by U.S. District Judge Alicemarie Stotler in Santa Ana, the settlement would end a period of tumult that began when a group of Platinum shareholders filed suit in January, alleging that the company violated securities regulations. The suit prompted an internal accounting review.

In April, the company acknowledged that it had overstated its revenue for the previous 18 months, prompting four top executives, including founder Gerald R. Blackie, to resign.

In May, Carmelo Santoro, a board member who became chief executive, said the crisis had forced the company to take a $15-million restructuring charge. It also lowered previous revenue reports by $17 million and announced plans to shed about a third of its 825 employees through layoffs and spinoffs of various units.

The company still faces an investigation by the Securities and Exchange Commission, said Bruce C. Edwards, a Platinum board member who acted as chief financial officer during the crisis.

“We felt it was important for the company to put the litigation question behind us and stay focused on driving the business forward,” he said.

Helen Hodges, a San Diego lawyer representing the plaintiffs, said that anyone who bought Platinum stock between Oct. 22, 1992, and April 18, 1994, will be eligible for a portion of the payment.

“I think it’s a great settlement,” she said.

Frank Michnoff, an analyst for Prudential Securities Research in New York, said the agreement will leave management with more time to devote to returning the company to profitability.

“They still have a number of things to take care of,” Michnoff said. “I’d say this agreement is good in that it doesn’t hurt their cash position that much, and it’s not bad to get this out of the way.”

Edwards said the company had $17 million in cash at the end of the first quarter.

Platinum’s former top officers--Blackie, Chief Financial Officer Jon Erickson and Treasurer Mark Tague--still face shareholder lawsuits. So do Timothy McMullen and Kevin Riegelsberger, who resigned their posts as executives but remain employees of the company.

If the settlement is approved, Platinum will issue $15 million in corporate IOUs to shareholders. It would pay $1 million in cash immediately and another $1 million in cash within six months.

The IOUs will pay 8% annual interest and will be subject to mandatory redemption in three stages on the following schedule: $5 million within nine months after final court approval of the settlement, $5 million after 18 months, and $5 million after 27 months.

Upon redemption, the IOUs could be converted to stock, cash or some combination of the two at the company’s discretion.