Lehman Brothers Holdings Inc on Tuesday won court approval for its reorganization plan, allowing it to end the largest bankruptcy in U.S. history and a major trigger of the 2008 global financial crisis.

The approval was granted by U.S. Bankruptcy Judge James Peck at a hearing in Manhattan. Lehman expects to begin payouts of an estimated $65 billion to creditors early next year.

Once the fourth-largest U.S. investment bank, Lehman is now a shell of its former self, having sold or closed many of its operations. Peck said Lehman may now proceed with its plan to wind down its remaining operations.

Peck spent more than three years overseeing the bankruptcy of Lehman, which filed for protection from creditors on September 15, 2008. He said that while Lehman may have been too big to fail, it was not too big to make it through Chapter 11.

The reorganization has cost Lehman's bankruptcy estate more than $1.5 billion to cover fees for lawyers and advisers, as well as other expenses.

The case is In re: Lehman Brothers Holdings Inc, U.S. Bankruptcy Court, Southern District of New York, No. 08-13555.

(Reporting by Caroline Humer; Editing by Lisa Von Ahn)