The federal judge presiding over Detroit's municipal bankruptcy ordered the mediator in the case to handle negotiations of collective bargaining agreements with the city's unions.
In a brief filing on Friday, Judge Steven Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan ordered Chief District Judge Gerald Rosen, whom he named as mediator between the city and its creditors earlier this week, to handle "negotiation and renegotiation" of collective bargaining agreements.
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Rosen on Friday ordered representatives of the city, its two pension funds and several unions, including the United Auto Workers and the American Federation of State, County, and Municipal Employees, to attend an initial mediation session on Sept 17.
The judge also ordered representatives of the state of Michigan and the state attorney general's office to attend, stipulating that all parties could have a maximum of two representatives and two attorneys in attendance.
More than 40 unions represent Detroit's 9,000 public sector workers.
Michigan Governor Rick Snyder, a Republican, appointed Emergency Manager Kevyn Orr in March to fix the city's finances. Orr has a broad range of powers and filed for bankruptcy on July 18 after offering creditors pennies on the dollar.
Detroit's bankruptcy is the largest such municipal case in U.S. history. The city has more than $18.5 billion in long-term debt, and the court battle with its creditors is expected to be protracted and very expensive.
(Reporting by Nick Carey; Editing by Gerald E. McCormick and Lisa Von Ahn)