UPDATED with Relativity statement, 5:04 PM: Peace has broken out in Relativity’s effort to emerge from Chapter 11 bankruptcy protection, the studio’s lawyer told the U.S. Bankruptcy Court today. One of its most vigorous challengers — Manchester Parties, controlled by Paul Singer’s hedge fund Elliott Associates — agreed to withdraw its objections to the process to sell the studio’s assets after Relativity made concessions designed to protect the lenders’ interests.

Also today, Judge Michael Wiles approved $49.5 million in debtor in possession financing, an increase from the previously proposed $45 million. He thanked lawyers for the “huge amount of work that’s been done.” Although “we can’t control everything in the world,” he said that “hopefully we can keep the business running and in as good shape as possible.”

The Manchester news comes after another of Relativity’s chief critics, RKA Film Financing, also agreed to withdraw its objections to the proposed bankruptcy process during the morning’s session. The agreements pave the way for Wiles to approve the sale process that will result in a new owner of all or part of Ryan Kavanaugh’s company.

“During Relativity’s hearing today, the company resolved numerous outstanding objections to the proposed sale timeline, including those from RKA Film Financing and Manchester Securities,” a Relativity spokesman said at day’s end via release. “The Court verbally approved both the sale timeline proposed on August 14 and the remaining DIP loan, which will allow Relativity to maintain its business operations throughout the Chapter 11 process.”

Among other things, the Manchester compromise today would give it access to Relativity sales data subject to a non-disclosure agreement. It would be able to consult on a sale, similar to the standing that the unsecured creditors have, but not meet with bidders. And no liens could be approved on films used as collateral for Manchester loans.

Manchester argued that a sale should be put on hold if it appeals a deal approved by the bankruptcy court. But it appeared to back off after Wiles said that other rules governing the sale process would protect its rights.

With that out of the way, Relativity told the court that it has resolved 12 of 16 objections to the sale calendar and process. Netflix, Viacom International, Fox, Relativity landlords and others maintained their right to object at a sale hearing tentatively planned for October 5.

One creditor, Macquarie Investments, differs over the rights to some films claimed by a lender group known as Stalking Horse Bidders. It hopes to buy Relativity for $250 million. But Macquarie did not challenge the time line for a potential sale.

A group that licenses film music questioned whether a movie, Act Of Valor, had been terminated before the bankruptcy petition. A Relativity lawyer said the company had “not concluded our analysis.” The studio expects to have an answer before a sale.

The plan Wiles is considering would allow entities to buy some, but not all, of Relativity’s assets — giving the company latitude to decide how to package them.

The proposed calendar would require bids for Relativity to be submitted by September 25 ahead of an October 1 auction and October 5 sale hearing. Wiles says that there’s a possibility the hearing could take more than a day.

PREVIOUS, 10:52 AM: In a surprise development, one of Relativity Media’s most oustpoken critics in its Chapter 11 bankruptcy process — RKA Film Financing — said in a U.S. Bankruptcy Court hearing in New York that it has withdrawn its objections to the proposed process.

“We think we need to get on with business here,” Latham & Watkins’ David Heller, representing RKA, told the court in a brief commment before a lunch break. The lawyer declined to discuss or even repeat his court statements, asking reporters to wait to read the transcript.

RKA has separately sued Ryan Kavanaugh and his company for alleged misuse of P&A funds — and sought to claim unreleased films including Masterminds, Kidnap, Somnia, Disappointments Room, and Lazarus. Last week, RKA said in a filing that Relativity’s revised plan leading to a potential sale in October was too vague about the lender’s rights versus those of other lenders. In addition, it said, the proposed calendar moves too quickly for those with objections to the process to figure out what’s going on, and then weigh in.

Earlier in today’s proceedings, the no-nonsense judge, Michael Wiles, swatted away some objections to the studio’s proposed sale process raised by a group known as Manchester Parties following an occasionally testy debate with the lender’s lawyer about the court’s authority in the process.

Manchester Securities and two other affiliates of Paul Singer’s hedge fund Elliott Associates own about $137 million Relativity’s debt and paid $80 million for about a third of its equity. The precise breakdown of interests in Manchester Parties remains murky. “One thing about working for a hedge fund, they often don’t tell you the relationship of the various entities,” Manchester’s lawyer told the court.

It hoped to delay the studio’s proposed sale calendar and change the process – in part because it says Relativity had violated its charter and agreement with Manchester.

For example, Manchester says that the terms establish that Relativity CEO Ryan Kavanaugh has the sole authority to sell the company, and needs a fairness opinion from J.P. Morgan before selling any asset worth more than $50 million. That would bar Chief Restructuring Officer Brian Kushner from managing a sale of the studio.

“Everyone in this room agrees he has been given the authority to negotiate that agreement and that is in violation of the [corporate] agreement,” Manchester said.

That raised Wiles’ hackles. “Are you saying [the agreements] supersede my authority to approve a sale?” he asked. He characterized Manchester’s argument as “sophistry” adding that “someone had the bright idea of putting into an operating agreement [the provisions] so someone could make the arguments you’re making today. “

Relativity helped to resolve the dispute by stipulating that the Kushner would need the board’s approval before agreeing to a sale.

The studio’s lawyer argued that Manchester was “wearing its creditors’ hat to block a Chapter 11” which was “completely improper.” A lender “cannot effectively block a debtor from seeking bankruptcy relief,” and in Manchester’s case “could be trying to jump ahead” of others owed money.

Relativity kicked off today’s proceeding by noting disputes it has resolved over insurance, employee wages, and payment of residuals and other fees to profit participants.

It also noted that a group of lenders called Stalking Horse bidders, who hope to buy Relativity’s assets for $250 million, had agreed to give up a proposed break-up fee if they don’t prevail and a provision that gives them the right to buy if their bid is unmatched.

Those disputes have now been resolved in the most important news to come out of today’s hearing in Manhattan so far. There is a lunch break now before it resumes this afternoon.