By David Willis BBC correspondent in Los Angeles

The terms of the settlement will remain unknown

Pop star Michael Jackson has settled a potentially embarrassing lawsuit which threatened to lift the lid on the state of his finances.

Jackson's former business manager Myung-Ho Lee claimed in the suit that the one-time king of pop was on the verge of bankruptcy.

If the case had come to trial it threatened to cause deep embarrassment to the highly secretive superstar.

The suit portrayed Jackson as a man who was living beyond his means, squandering his multi-billion dollar fortune.

It alleged he had racked up more than $200m in credit in a single year and continued to spend lavishly in order to maintain his eccentric lifestyle.

Myung-Ho Lee, who is Korean, claimed Jackson owed him $12m in back pay and, as well as failing to pay for his services, had taken the advice of charlatans and hangers-on.

Jackson has now been spared having to take the witness stand in court next week in what looked like becoming one of the celebrity trials of the decade after the two sides announced they had reached an out-of-court settlement.

Jackson had applied to have the case dismissed.

The terms of the settlement will remain confidential.

On Tuesday, Jackson spent more than six hours giving a deposition in Indianapolis in a copyright lawsuit.

The suit alleges that the Jackson Five used the name of another Gary, Indiana band and also used two of their songs without licence.