In its latest effort to emerge from bankruptcy protection, Criimi Mae Inc. has settled a lawsuit filed by Morgan Stanley & Co. International Limited.

The Rockville, Md.-based commercial mortgage real estate investment trust has filed a motion with the U.S. Bankruptcy Court to approve the agreement, which calls for the sale of seven classes of subordinated commercial mortgage-backed securities that were part of the financing of CMBS by Morgan Stanley. The agreement also calls for a final settlement of all adversary proceedings between Criimi Mae and Morgan Stanley. That hearing is scheduled to take place Feb. 28.

In related news, two unsecured creditors committees have reached a settlement relating to the two reorganization plans filed with the court. The hearing scheduled was to argue for the suspension of the plan filed by Criimi Mae's unsecured creditors to liquidate the REIT until the court had given full consideration to the reorganization plan filed by the official creditors.

The settlement calls for the official creditors to withdraw the proposal to suspend the liquidation hearing and the unsecured creditors to amend their liquidation proposal to provide for full payment of the allowed claims of the unsecured creditors of Criimi Mae Management Inc.

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