Celebrity agent Titus Day, jailed in 2022 for embezzlement before his convictions were quashed, apologised to the Australian Idol winner on Wednesday.
It came after the pair reached a confidential agreement and Sebastian dropped a Federal Court civil suit against Day.
"There were many instances in which payments that should have been passed on to Guy, were not," Day said in a statement.
"My management company's failure to properly account for and pass on those payments to Guy was the result of my mistake."
The pair had been locked in a fierce dispute for nearly a decade, since Sebastian brought allegations Day had been withholding nearly $1 million in payments owed to him.
Those complaints led to Day being convicted by a jury in 2022 on 34 counts of embezzlement and jailed for four years.
But the verdicts were thrown out after an appeals court found prosecutors made inappropriate comments to the jury during a closing address.
A second jury acquitted him of four offences and failed to reach a verdict on the remaining charges. Prosecutors ultimately decided not to pursue the case further.
Day - who was paid about $500,000 a year by Sebastian according to the singer's 2022 testimony - admitted he failed in his duties towards the latter half of the pair's nearly 12-year commercial relationship and regretted his unwillingness to reach an agreement earlier.
"I would do things differently if I had my time again," he said.
"At an early stage in the dispute, I should have been more reasonable and less emotional, which I have no doubt would have led to a swifter and more conciliatory outcome."
Day managed the Australian Idol winner through his company 6 Degrees between 2009 and 2017, before their relationship ended.
Sebastian, who rose to prominence as the inaugural winner of Australian Idol in 2003 before releasing a series of chart-topping songs and albums, said he was pleased to put the dispute behind him.
"I know this impacted a lot of people around me, but I believed it was something I couldn't walk away from," he said in a statement on Wednesday.
"I never could have imagined the twists and turns this ordeal would take," he said, thanking his lawyers, family, friends and team.
His lawyer, Mark Faraday, said Day's statement spoke for itself.
"It contains a clear apology, an acceptance of responsibility and an acknowledgement that payments owed to Guy were not passed on," he said.
"A private resolution has always been Guy's preference.
"Unfortunately, this did not happen, and the matter took many unexpected turns over a long period of time."
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