A U.S. Bankruptcy court judge on Friday dismissed a challenge to a proposed $50 million settlement between UAL Corp. and the Walt Disney Co., an agreement that the airline's unsecured creditors had charged was too generous.


The proposed payment would settle a $200 million claim that Disney made in a bid to recover money the Burbank media giant says it is owed under a contract requiring United to compensate it for any tax loss suffered from a cancellation of aircraft leases.


Disney, far better know for its studio, television and resorts, had entered the airplane leasing business, which gave it multiple tax benefits. It had an agreement to lease a Boeing 757 jet to United. But the troubled airline filed for Chapter 11 bankruptcy protection in 2002 and the next year rejected a lease on a Boeing jet that was partly owned by Disney. The entertainment company took a $114 million pretax charge that year due to the scuttled lease.


United has offered to shell out about $150 million to the financiers to make up for tax benefits lost when the airline rejected the Disney and several other Boeing jet leases. The proposed Disney payment is the largest that the airline is planning to make to backers of Boeing jets in its fleet.


The airline's unsecured creditors had objected to the settlement deal, alleging it set a precedent for overpayment, leaving less money for United to pay unsecured creditors.


United Airlines spokeswoman Jean Medina said the settlement was a step in the right direction for the company, by limiting the "number and dollar amount" of claims it is facing.


Disney representatives declined comment Friday.


*This story was compiled with staff and wire reports.

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