James Packer and Lachlan Murdoch have paid $40 million to settle a long running dispute with creditors of the failed telco One.Tel.

One.Tel liquidator Stephen Parbery said entities associated with Mr Murdoch and Mr Packer had resolved all litigation arising from the collapse of the dot-com company in May 2001.

As part of the settlement agreement, Consolidated Press Holdings will pay $14.93 million, Crown Resorts will pay $11.77 million and News Ltd will pay $13.3 million to One.Tel.

The main creditors of One.Tel are understood to be Telstra and Optus.

“Resolution was successfully reached following a confidential and informal process,” Mr Parbery said in a statement.

The Supreme Court of New South Wales approved the settlement.

Mr Packer and Mr Murdoch lost a combined $1 billion in the 2001 collapse, which came with the company owing $350 million.

They had been served with a claim regarding One.Tel’s cancellation of a $132 million capital raising on the day it entered administration.

Companies associated with Mr Murdoch and Mr Packer were to underwrite a $132 million rights issue by One.Tel in early 2001, but the fundraiser was cancelled as the company’s directors believed it was not enough money to keep the telco going.

Both Mr Packer and Mr Murdoch, who were One.Tel non-executive directors, have maintained since the collapse that they were profoundly misled about the telco’s financial situation.