By Tom Corrigan

On Monday in Manhattan, U.S. Bankruptcy Court Judge Shelley Chapman will be asked to approve a $1.28 billion settlement between Lehman Brothers Inc. and Barclays PLC, which bought Lehman's brokerage business days after the investment bank's 2008 collapse.

If approved, the settlement will end one of the long-running legal battles arising from the financial crisis.

The money, related to the assets that went to Barclays when it bought Lehman's U.S. brokerage out of bankruptcy in the frantic days of September 2008, was a key issue in a 34-day trial in 2010. The Lehman brokerage and its parent company accused Barclays of negotiating a secret discount when it bought Lehman's brokerage.

As part of the deal, the two sides will drop current and future litigation against one another, and Lehman will pay Barclays $1.28 billion. More than $600 million in cash will become available for Lehman creditors, because Lehman had set aside about $1.87 billion for the dispute. Both Lehman and Barclays said the payment is about $80 million less than what the trustee winding down Lehman's brokerage business would have had to pay without a settlement.

On Wednesday in Wilmington, Del., Altegrity Inc., the parent of a government security investigations contracting business, will ask a judge to approve its bankruptcy-exit plan.

Altegrity and its affiliates filed for chapter 11 bankruptcy protection in February, having lost the federal government contracts that accounted for about one-third of its revenues.

Altegrity, along with two associated private security and screening businesses, Kroll and HireRight, is slated to emerge from bankruptcy with fresh cash from backers. All are owned by Providence Equity Partners, but creditors will be taking equity once the chapter 11 plans are in place.

US Investigations Services, a division of Altegrity Inc. that also filed for bankruptcy in February, is being liquidated.

USIS vetted Edward Snowden for his National Security Agency contract work, and it conducted the background check on Aaron Alexis, who was working for a government subcontractor when he killed 12 people in a shooting rampage at the Washington Navy Yard in September 2013. Last summer, USIS was hit with a cyberattack that exposed the personnel files of Department of Homeland Security employees to hackers.

While USIS's unsecured creditors are hoping for lawsuit recoveries, unsecured creditors of Altegrity, Kroll and HireRight would be allotted $1.25 million to split under the plan. First-lien debt would be reinstated under the plan, while holders of about $519 million worth of second-lien debt will get 96.1% of the equity in the reorganized Altegrity, for a recovery estimated to be about 48% of what they are owed. Remaining equity in the reorganized company would be divided among other bondholders, chapter 11 plan papers say.

In Manhattan Thursday, auto-parts maker Chassix Holdings Inc. will ask a bankruptcy judge to sign off on a newly announced restructuring plan that has support from the majority of its creditors.

As part of the new plan, Chassix says it has satisfied the objection of its official committee of unsecured creditors, who had said a prior plan undervalued the company by $150 million.

The plan has support of private-equity firm Platinum Equity Advisors, which owns Chassix, as well as holders of 73% of the company's secured bonds and 80% of its unsecured bonds, Chassix said. Chassix's overall strategy in bankruptcy is for the holders of more than $500 million in debt to convert those claims into equity in the restructured company. Unsecured creditors were slated to recover between 5% and 16% of what they are owed, which is why they were balking at the original proposal.

The creditors had said the prior plan would improperly release Platinum as well as Chassix's directors and officers from all potential litigation, including fraud, gross negligence and willful misconduct. Creditors in bankruptcy cases typically want the right to go after potential future claims, especially if they are only getting pennies on the dollar. It is unclear whether some of these provisions have been removed.

Chassix, a parts supplier to large auto makers, filed for chapter 11 in March with a restructuring agreement that had the support of the majority of its bondholders.

 
  --Joseph Checkler and Peg Brickley contributed to this article. 
 

Write to Tom Corrigan at tom.corrigan@wsj.com

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