By Nick Brown

NEW YORK (Reuters) - With more than $140 billion worth of claimholders now supporting its proposed bankruptcy exit plan, Lehman Brothers Holdings Inc's <LEHMQ.PK> prospects for getting the plan approved by the end of the year are brightening.

Three months ago, the fallen investment bank was in a battle for control of its bankruptcy with creditors who had their own ideas for how assets should be allocated.

But after a string of successful negotiations with those creditors, including Wednesday's accord with Bank of America Corp <BAC.N> and its Merrill Lynch unit, many of Lehman's largest creditors now support a plan that will give creditors $65 billion, on average roughly one-fifth what they are owed.

"It certainly looks like they're moving in the direction of a largely consensual confirmation hearing," said Stephen Lubben, a professor at Seton Hall University School of Law.

That is not to say confirmation will be a breeze, Lubben said. Lehman, the largest Chapter 11 debtor in history, may still be in for a "laborious" hearing, he said.

"But if you're taking the big creditors off the table, the hope is you'll only have to deal with a handful of objections from smaller ones," he said.

A Lehman spokeswoman on Thursday said about 50 large creditors with $140 billion of claims now support its plan.

Bank of America and Merrill agreed to support the plan and reduce their derivatives claims against Lehman by $7.5 billion -- about $4 billion in underlying claims and another $3.5 billion in guarantee claims.

Lehman touted the deal in the context of its larger effort to resolve disputes with big bank derivative counterparties.

"This motion today ... brings the total banks with which we have settled to 10 of 13," Ehrmann said.

Among the other creditors who back Lehman's plan are bondholders led by hedge fund Paulson & Co, and other large banks with derivatives claims, such as Morgan Stanley <MS.N> and Goldman Sachs Group Inc <GS.N>.

If enough creditors vote to approve Lehman's reorganization plan in a November 4 ballot, it will go before a bankruptcy court for a confirmation hearing beginning December 6. Court confirmation could allow it to exit bankruptcy and begin payouts in the first quarter of 2012.

Lubben said the bank has every incentive to emerge from bankruptcy as soon as it can.

"If the plan is confirmed and creditors appeal, there's a better chance those appeals will be denied if the plan has already been implemented and distributions have begun," he said.

Lehman's $639 billion bankruptcy in 2008 was a major catalyst of the financial crisis. Its thousands of creditors have asserted well over $300 billion in total claims.

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

(Reporting by Nick Brown, editing by Matthew Lewis)