In a potential breakthrough in the historic Detroit bankruptcy case, court-appointed mediators say they have been advised by Michigan Gov. Rick Snyder's office that he will support a package of state aid to protect the pensions of city retirees as well as the city-owned art collection at the Detroit Institute of Arts.
The announcement follows word last week that a group of private foundations has pledged more than $330 million to rescue the city.
In a statement, the mediators say the foundations played a "critical and constructive role" in the process. Snyder "has indicated that he will engage with the Michigan Legislature to help secure support for the plan," according to the statement.
The city's employee unions have long been pressing for the state to provide aid to its largest city. But it is unclear how much aid the governor is willing to support. Also unclear are the conditions that might be attached to the funds. Aides to the governor as well as both Republicans and Democrats in the Michigan Legislature have said there should be strings attached to any state aid.
In their statement, the mediators say they "urge that all parties approach the issue with an open mind."
—By CNBC's Scott Cohn. Follow him on Twitter @ScottCohnCNBC