NEW YORK, US - A NEW YORK bankruptcy judge approved on Tuesday an 'automatic stay' for Lehman Brothers Holdings Inc, allowing the company to protect its property from creditors during the bankruptcy process.

The stay is typically issued as a matter of routine in US bankruptcy cases, but US Bankruptcy Judge James Peck said it was particularly important that it be emphasised in this case.

'There is nothing more important than confirming the automatic stay applies globally,' Judge Peck told the standing-room-only court room in lower Manhattan.

Judge Peck also said he would provide a 'comfort order' for JPMorgan Chase & Co that allows the firm to continue providing trade clearing advances to Lehman's broker-dealer unit. The broker dealer has not filed for bankruptcy protection and needs the funds from JPMorgan to function, lawyers for Lehman and JPMorgan told the court.

JPMorgan advanced US$87 billion (S$124.4 billion) on Monday to help clear and facilitate securities transactions with customers and clients of Lehman, according to court documents. Lehman said it had provided US$17 billion in collateral to JPMorgan for the advances.

A representative for the Federal Reserve Bank of New York said in court that the advancing services provided by JPMorgan were integral to the market.

'If we stop, the broker dealer stops. It's that simple,' Mr Harold Novikoff, a lawyer for JPMorgan told reporters after the hearing.

The judge also approved motions allowing Lehman to extend time for certain procedures and appoint a claims agent. -- REUTERS