Peck, a 65-year-old native New Yorker, was the Manhattan court's second most-junior bankruptcy judge in September 2008 when he was randomly assigned the $639 billion Lehman bankruptcy, the biggest in U.S. history.

SEC Encouragement

His Sept. 19, 2008, order approving the brokerage sale was signed four days after the 158-year-old bank collapsed. The order was encouraged by the U.S. Securities and Exchange Commission and the Federal Reserve Bank of New York, which were seeking to calm global securities markets spooked by the bankruptcy, according to court testimony.

Peck's order allowed Lehman's and Barclays' lawyers to change any documents he had approved, or add documents that weren't finished yet, though he said the changes shouldn't "have a material adverse effect on the debtors' estates" and should be approved by Lehman, its creditors and Barclays.

In the trial, which has been going on since April, Lehman accuses Barclays of taking a $5 billion "secret" profit on a portfolio of securities it acquired with the brokerage, and of making another $6 billion by writing up business assets, skimping on promised payments and "grabbing" more financial assets belonging to Lehman.

Disputed Assets

Some of the disputed assets were assigned to Barclays in the clarification letter filed in court on Sept. 22, 2008, two days after Peck approved the sale.

Barclays says it wants $3 billion of assets that were never delivered. Lehman has no legal right to challenge the transaction now because its advisers knew and documented all the details when the deal was struck, and defended it in a higher court when it was challenged, according to Barclays.

Peck will be reluctant to overturn his entire sale order for "bankruptcy policy reasons," said Bowles. So-called 363 sales, which helped the former General Motors Corp. and Chrysler LLC to reorganize in bankruptcy and created jobs for 10,000 Lehman employees at Barclays, normally are considered final in the courts, he said.

Under Peck, the two-year case has cost Lehman creditors $1 billion in fees to managers and advisers, the most expensive bankruptcy ever. Briefs summarizing each side's evidence are due in late November.