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Lehman Brothers Holdings Inc asked a judge to approve a $767-million settlement with Freddie Mac to pay off a $1.2 billion bankruptcy claim, one of the biggest remaining against the defunct bank.
The deal with the government-controlled mortgage-finance company will make hundreds of millions of dollars available for "prompt distribution" to creditors after being held in reserve as a result of the dispute, Lehman said in a filing in US Bankruptcy Court in New York.
"Absent the settlement agreement, this cash would remain trapped," Lehman's lawyers said in the filing. The dispute stemmed partly from Freddie Mac's attempt to give its claim a higher priority than those of other creditors.
