Highland Capital Management will stay on as the manager of a $950 million collateralized loan obligation after all.

Citigroup, the deal’s underwriter, had tried to remove Highland and replace the firm with Babson Capital Management after the Dallas-based money manager refused to liquidate the vehicle, called Liberty CLO.

Highland responded by suing Citigroup in state court in Dallas County, Texas, in April.

Now Highland has exercised a provision in Liberty CLO’s indenture allowing it to buy some of the most subordinated tranches of the fund from Babson and Citigroup.

“Highland Capital Management L.P. is pleased to announce that it will continue as portfolio manager for Liberty CLO following the June 13th completion of a $74,200,000 buy-out of Liberty Class E Certificates pursuant to Liberty’s portfolio management agreement,” the firm said in an emailed statement.

It said it “looks forward to continuing its management of Liberty CLO for the benefit of all investors.”

The transaction was reported earlier by Bloomberg.

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