Wheeldon, through his New York agent Jane Hermann, had said that the company was in breach of contract for pulling his new production of Alice in Wonderland from their 2005-06 schedule.
In addition, Hermann said, artistic director Martin Fredmann was "peddling the rights to this ballet without our permission."
Fredmann denied this, saying that Hermann and Wheeldon knew he had talked to Miami City Ballet and Utah's Ballet West about underwriting the production's costs, which have been cited at $800,000-$1 million.
Colorado Ballet canceled Alice in Wonderland because it was financially unfeasible for the company, and replaced it with a revival of Sleeping Beauty.
Wheeldon, according to the News, has agreed to accept a $20,000 advance fee and drop the suit, and asserts that his relationship with Fredmann is intact. "I hope there are no hard feelings," he said. "Martin and I have been in contact."