By Andrew Scurria

The judge presiding over Windstream Holdings Inc.'s bankruptcy case approved a restructuring strategy that puts Elliott Management Corp. and other senior creditors in control of the business while extinguishing more than $4 billion in debt.

Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., confirmed the telecommunications company's chapter 11 plan, which wipes out junior bondholders owed nearly $2.4 billion, converts some senior debt to equity and positions Elliott as Windstream's largest shareholder.

The judge's ruling puts Windstream on a glide path to end a bankruptcy that began last year when Aurelius Capital Management LP won a lawsuit against the company, forcing a hurried chapter 11 filing.

To cover the costs of exiting bankruptcy, Windstream has secured a commitment from Elliott and other lenders to supply $750 million in equity financing. They are taking ownership of 100% of Windstream under the chapter 11 plan, while unsecured creditors receive nothing.

"That is an unfortunate result, obviously," Judge Drain said, ruling orally after a trial held via videoconference.

The restructuring strategy also rests on the settlement of a lease dispute with Windstream spinoff Uniti Group Inc. that brought in more than $1.2 billion to help pay down Windstream debt. Windstream and Uniti spent much of the bankruptcy locked in battle over a $650 million annual rent agreement that provided Windstream with the use of fiber and copper networks throughout the country. The lease with Uniti is critical to Windstream's operations, and the two companies depend on each other.

Junior bondholders said they deserved some of the settlement value, arguing it wasn't the property of the senior creditors. The company refused, saying that junior creditors shouldn't recover anything from the settlement proceeds when first-lien lenders weren't being paid in full.

Judge Drain sided with the company, finding the proceeds belong in the hands of the senior creditors. The judge likewise said that unsecured creditors couldn't collect on other assets.

It was the lease with Uniti that laid the groundwork for Windstream's bankruptcy. A federal judge ruled in February 2019 that Windstream's debt covenants prohibited the spinoff, yielding a $310 million judgment for Aurelius and putting Windstream's debt into default.

Windstream at the time accused Aurelius of "predatory market manipulation" to profit from default insurance contracts by forcing a healthy company into bankruptcy. Aurelius called the allegation "nonsense" and said Windstream alone was responsible for its plight.

Write to Andrew Scurria at Andrew.Scurria@wsj.com