On Friday, K-V Pharmaceutical (UNKNOWN:KVPHQ.DL) announced that the U.S. Bankruptcy Court for the Southern District of New York has approved the company's settlement agreement with Hologic (NASDAQ:HOLX), resolving the company's dispute over the Makena drug for mitigating the risk of premature delivery. The court has also permitted K-V to enter into a debtor-in-possession financing arrangement that will be used, in part, to fund the settlement.

K-V noted that the settlement with Hologic resolves all disputes between the two parties, confirms K-V's ownership of the drug, and is a key step in K-V's progress toward emerging from Chapter 11 bankruptcy.

Shares of K-V, now trading on the over-the-counter market, dropped one penny (17.5%) on the news to $0.07. Shares of Hologic declined 0.7% to $19.98.

Fool contributor Rich Smith and The Motley Fool have no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.