Vinnee Tong, THE ASSOCIATED PRESS

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NEW YORK - A group of managers and employees has won an auction to buy Lehman Brothers Holdings' prized investment management unit, which includes the Neuberger Berman money management business.

The bid from the Neuberger Berman group beat out two other competing bids, one of which came from the private equity firms Bain Capital Partners and Hellman & Friedman.

The size of the wining bid wasn't disclosed, but Bain and Hellman's bid had previously valued the unit at US$2.15 billion. Representatives for Lehman and Neuberger didn't return calls for comment, and officials and Bain and Hellman declined to comment.

Lehman chief operating officer Jim Fogarty said the management group's bid offered greater value than other bids and had more certainty of closing. Fogarty in a statement called it the "best outcome for the creditors" but Hellman's managing director Allen Thorpe said his firm was "disappointed."

The Bain-Hellman team had agreed to buy the unit in partnership with the management on Sept. 29, just two weeks after Lehman filed for protection from its creditors in the biggest bankruptcy in U.S. history.

That agreement was called off and a bankruptcy court-sanctioned auction was started after private equity firm the Carlyle Group complained that a quick sale would be unfair.

The management team's winning bid, and its losing bid with Bain and Hellman, means it had two horses in a three-horse race. The identity of the third bidder was not disclosed.

The new company, Neuberger Investment Management, will be 51 per cent controlled by management, while Lehman retains a 49 per cent stake.

George Walker, global head of investment management for Lehman Brothers, will be chief executive, and Joe Amato will continue to lead Neuberger Berman, the largest operating unit.

The entire company comprises businesses that manage approximately $160 billion of assets.

The deal is expected to close in the first quarter of next year after bankruptcy court approval later this month.

Founded in 1939 by Roy Neuberger, Neuberger Berman was the last big asset to be sold off in the Lehman bankruptcy.

Lehman has already agreed to sell key U.S. assets to Britain's Barclays Capital for $1.35 billion and its Asian, European and Middle Eastern businesses to Japan's largest brokerage, Nomura Holdings Inc. for $2 billion.

Once the Neuberger deal is settled, Lehman will face the complex task of winding down millions of derivative contracts as it liquidates what is left.

Among the assets left to be liquidated is $8 million worth of artwork currently stored in warehouses in New York and Paris. U.S. Bankruptcy Judge James Peck approved payment of $20,000 in fees to art handlers Stebich Ridder International Inc. in New York and Andre Chenue SA in Paris, to retrieve the artwork from warehouses so it could be sold.

Lehman's longtime chief executive, Richard Fuld - who will leave Lehman at the end of the year - was known to be an active art collector. More artwork, beyond the $8 million in warehouses, can be found in Lehman offices, according to a court filing.

The judge also approved a plan to sell a Dassault Falcon 50 plane, three aircraft engines and some parts for $6.2 million.

Peck also granted Lehman's request to pay as much as $3 million in legal expenses for former employees. Fuld and at least 11 other former or current Lehman employees have been subpoenaed in three grand jury investigations into potential wrongdoing at the failed investment bank.

Lehman wants to pay the legal bills to protect sensitive information and provide counsel to former employees. If the expenses exceed $3 million, Lehman will need to seek the court's approval again.

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Business Writer Ryan Nakashima in Los Angeles contributed to this report.