Barclays has settled the first British lawsuit filed over allegations the bank manipulated Libor, weeks before the trial was scheduled to start.
Barclays agreed to restructure the debt of Graiseley Properties, which filed the lawsuit, as part of the settlement, Barclays said in a statement.
The company, part of the Guardian elderly care homes group, was seeking to rescind interest-rate hedging contracts linked to Libor.
The settlement spares the bank a trial that would have featured testimony from former Barclays officials, including ex-chief executive officer Bob Diamond.
Banks including Barclays, UBS and Royal Bank of Scotland Group have been fined a total of about US$6 billion for manipulating the London Interbank Offered Rate, or Libor, and related benchmarks that underpinned about US$300 trillion worth of transactions worldwide.
"In order to support the ongoing viability of Graiseley's care home business, the parties have agreed to a commercial restructuring of Graiseley's debt, which reflects the impact of changes in conditions in this sector over the last few years," London-based Barclays said in a statement.
"Graiseley has withdrawn the litigation."
Anthony Maton, Graiseley's lawyer, didn't immediately respond to an e-mail seeking comment on the lawsuit.
The case has featured a variety of correspondence from company employees that gave an inside glimpse in the bank's Libor operations.
At a hearing last month, lawyers for Graiseley introduced a 2007 e-mail from Jerry Del Missier, the former chief operating officer of Barclays, describing the rates as a "fantasy."
Del Missier and Diamond both resigned in the wake of the Libor scandal in 2012.
Barclays has said Guardian owes about 70 million pounds (NZ$135 million) including loans. The swaps, which were designed to lower the company's exposure to rising interest rates, ended up costing Guardian about 12 million pounds.
In court documents from a January hearing, Guardian's lawyers said the company couldn't get an overdraft or refinance its loans because of the dispute and its resources were "stretched to the limit."
They said Guardian's aim was "to be relieved of the financial burden of these instruments, to refinance and to start growing their" business again.
Guardian sued the bank to invalidate the swap, and later added Libor allegations to its case, saying that it should have been told the benchmark was rigged.
"It has always been the Libor element that has been the most interesting part, so obviously there'll be no precedent," said Tom Hibbert, a lawyer at Reynolds Porter Chamberlain LLP in London who isn't involved in the lawsuit.
"People will see the fact that Barclays has settled a case which has Libor elements as an interesting development and possibly one that is encouraging."
Britain's only other lawsuit linked to Libor-rigging is Indian property firm Unitech's case against Deutsche Bank.
In November, Unitech, in a joint court of appeal hearing with Guardian, won permission to seek to void an interest-rate swap that was pegged to the benchmark.