Detroit reaches first union deal since bankruptcy

Detroit's emergency manager has reached a labor deal with its EMT union.

NEW YORK (CNNMoney)

The five-year deal still needs to be approved by Bankruptcy Judge Steven Rhodes, who is ruling on the city's reorganization efforts, and by other authorities.

But it suggests that such deals are a possibility, despite the city's dire financial condition and the proposal by Emergency Manager Kevyn Orr to make deep cuts in pension benefits and retiree health care coverage.

The agreement was confirmed Thursday by Orr's spokesman, who said details will be released later in the day.

Orr told reporters Wednesday about the deal at a meeting of the Detroit chapter of the National Association of Black Journalists. The Detroit News reports that Orr said he hoped it was the first of many such deals.

Related: Time for Detroit to put pride aside

"It's a good sign," the paper quote Orr as saying. "It indicates our willingness to reach an agreement with an interested party that wants to work with us."

The city's unions and pension funds have been arguing in bankruptcy court that the city did not negotiate in good faith with them before it filed for bankruptcy in July.

Related: Detroit delays retiree health care cut due to Obamacare site woes

The argument is important, because for the city to be allowed to reorganize its debts in bankruptcy court, it must not only be deemed insolvent. A judge must also determine that the city made a good-faith effort to reach a deal with its creditors, or that it was impractical to do so.

Rhodes is expected to rule sometime later this month on whether Detroit did negotiate in good faith and whether its bankruptcy case can proceed.

-- CNN's Poppy Harlow contributed to this report.

First Published: November 14, 2013: 9:44 AM ET

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