Philip Seymour Hoffman, David Bar Katz

Lenny Abbot/, Ben Gabbe/Getty Images

The National Enquirer has issued an apology and pulled their article claiming that Philip Seymour Hoffman and longtime friend David Bar Katz were lovers.

The source for the story reportedly was a hoaxster, who falsely claimed to be Mr. Katz. Following its publication, the fallen actor's pal, who had never spoken to the Enquirer, slapped the magazine with a $50 million defamation lawsuit.

It appears that both parties have come to a settlement, but only some details have been released.

What we do know is that Katz has started the American Playwriting Foundation in Hoffman's honor, which will award an annual prize of $45,000 for an unproduced play. The Enquirer and its publisher, American Media Incorporated, are going to be funding both the foundation and prize.

The paper also agreed to purchase a full-page advertisement in the main news section of The New York Times today.

In the ad, they claim that they were "tricked" by a person claiming to be Mr. Katz.

The total amount of money that is being paid towards the fund and the ad has not been disclosed; however, Katz's attorney Judd Burstein says that "it's enough for the foundation to give out these grants for years to come."

Burstein filed papers on Tuesday to formally dismiss the lawsuit. According to the Times, Burstein noted that his client did not receive or seek any personal payments.

Katz discovered Hoffman's body in his New York City apartment on Feb. 2, after the actor failed to pick up his kids for a visit.

The Oscar winner was in his bathroom, a needle stuck in his left arm. Investigators later found nearly 50 envelopes of heroin in the apartment, as well as empty baggies and 20 used syringes.

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