Excerpt:

A bankruptcy judge has denied SunCal Co.'s request to block Lehman Brothers Holdings Inc. (LEHMQ) from closing a deal to buy back $1.5 billion in loans from affiliate Fenway Capital LLC pending an appeal.

The ruling by Judge James Peck of the U.S. Bankruptcy Court in Manhattan is a blow to SunCal, which had hoped to prevent the repurchase of seven loans that are at the center of a long-running dispute between the developer and the failed investment bank over stalled California real-estate projects.