Page last updated at 07:47 GMT, Saturday, 20 September 2008 08:47 UK

Judge approves $1.3bn Lehman deal

Lehman headquarters in New York
Lehman's Manattan skyscraper is reportedly worth nearly $1bn

A New York bankruptcy judge has backed a $1.3bn (700m) plan for Barclays to buy the core business of collapsed US investment bank Lehman Brothers.

The deal gives the UK bank ownership of Lehman's Manhattan skyscraper - worth nearly $1bn - as well as responsibility for some 9,000 former staff.

Lawyers for what was the fourth biggest US investment bank said they were confident many jobs would be safe.

Lehman collapsed on Monday sparking a week of turmoil on financial markets.

A US bankruptcy judge approved the sale after a seven-hour hearing that ended past midnight, saying he had found no better alternative for the assets Lehman sought to sell.

'Tsunami victim'

"I have to approve this transaction because it is the only available transaction," the judge, James Peck, told a packed Manhattan court.

He said he was saddened by the case, which he called the "most momentous bankruptcy hearing I have ever sat though".

"Lehman Brothers became a victim, in effect the only true icon to fall in a tsunami that has befallen the credit markets," the judge added.

The demise of Lehman - which collapsed having incurred huge bad debts related mainly to the US mortgage market - prompted the largest US bankruptcy case in history.

Earlier this week, Barclays had agreed to buy the bank's North American investment banking and trading unit for $250m, as well as its New York headquarters and two data centres for $1.5bn.

But the final figure was reduced after Lehman's lawyers said new property valuations were less than expected and that the company's trading accounts had shrunk.

The deal will free up cash to fund operations while the rest of the company unwinds. A lawyer for Lehman's said accounts worth around $138bn were dependent on the sale.

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