The case had been expected to last up to four weeks, with a judgment expected to take as long again.
Lep announced that it would be paying no compensation to Mr Read but would meet his court costs up to an agreed amount - believed to be around pounds 350,000.
Mr Read was dismissed at the behest of the group's bankers without compensation at the end of 1991.
He had a three-year rolling contract with the company worth more than pounds 300,000 a year. If successful, his claim could have cost Lep up to pounds 2.6m.
Last week, when it became clear that the case would be coming to court, Lep's present chairman, the 'company doctor' David James, began seeking an alternative solution.
Mr James asked the group's bankers to keep in constant communication 'with a view to assessing the means by which to resolve any unfavourable judgment resulting, so that the best interests of the banks and all other parties concerned with Lep are preserved'.
Shares in Lep fell from 6p to 4p earlier this week as it became clear that the case had reached court, and that the company - which has virtually no surplus funds available - was not in a position to make any immediate payments of pounds 1m or more.
Yesterday, on news of the settlement, the shares rose to 5.25p.
Mr Read, who is trying to arrange a voluntary agreement with his creditors, is involved in a separate dispute with the directors of the company's pension fund.
The fund's directors have not authorised pension payments to him following controversy over the sale of a property by the company to the fund during Mr Read's tenure at Lep.
Lep, which has debts of around pounds 380m, was forced into a financial restructuring after it emerged that a number of investments entered into during Mr Read's time in charge had gone wrong.
Shares in the company plummeted and, under the terms of the rescue, the banks swapped some of their debt for 85 per cent of the company's equity.
Mr Read said last night that he could not afford to take on the company and its bankers in a lengthy court case.
He said he completely rejected allegations that were going to be aired in court by Lep about his stewardship of the company.
The company's decision to make a substantial payment towards his costs was a vindication of his position, he said.Reuse content