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Lehman Brothers Proposes End To Bankruptcy

Lehman Brothers Holdings Inc defended on Tuesday a proposed plan to end the largest bankruptcy in U.S. history, but said it will alter certain language to resolve objections from the U.S. Trustee.

Lehman filed court papers in U.S. Bankruptcy Court in Manhattan asking Judge James Peck to approve the outline for its $65 billion payback plan in the face of 18 objections from various parties, including one from the office of U.S. Trustee Tracy Hope Davis.

If Peck green-lights the outline at a hearing scheduled for Tuesday, it will be sent to creditors for a vote. Lehman, which has negotiated nonstop with creditor groups in an attempt to gain widespread support for its plan, hopes to end its bankruptcy and begin paying back creditors by early 2012.

The trustee argued in an August 11 objection that the outline was too vague on certain issues, including the post-bankruptcy role of the committee installed to oversee fee requests from professionals in the case.

Lehman said it will add language explaining that the committee will continue to exist post-bankruptcy and will be disbanded after professionals submit their final fee applications.