Excerpt:

A federal judge approved a compromise between Lehman Brothers Holdings Inc. and a bankruptcy trustee, paving the way for the sale of a handful of stalled Southern California real-estate projects Lehman helped finance in conjunction with developer SunCal Cos.

udge Erithe A. Smith of the U.S. Bankruptcy Court in Santa Ana, Calif., approved the deal between Lehman's commercial-paper unit and Chapter 11 trustee Alfred H. Siegel, subject to certain "narrow conditions," according to court papers filed Thursday.

Mr. Siegel oversees the bankruptcy cases of several SunCal real-estate projects encompassing more than 5,000 acres in Southern California. The properties at issue include McAllister Ranch, a 2,070-acre planned residential community near Bakersfield and a pair of developments—McSweeny Farms and SummerWind Ranch—in Riverside County.