Embattled US bakery group Interstate Bakeries (IBC) has reached agreement on employee contracts with the one of two trade unions representing workers.

IBC said it had struck a deal with the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union (BCTGM).

Interstate, which filed for bankruptcy protection in 2004 and continues to operate as a debtor-in-possession, paid tribute to the union's leadership and its commitment to the company and its workers.

"We appreciate the responsiveness, hard work and professionalism that the BCTGM's leadership has demonstrated throughout this difficult process," said CEO Craig Jung. "Their commitment to our company and its employees is to be applauded.

Jung added that it had been the company's goal from the outset to return IBC to profitability through initiatives that lower costs and sustain competitive advantage. "I believe these modifications take us a long way toward that goal," he said.

IBC had previously said that if agreements regarding modifications to the collective bargaining agreements with the company's two principal unions, the BCTGM and the International Brotherhood of Teamsters, were not reached by the end of September, it would seek approval of the Bankruptcy Court to extend the exclusive periods within which to file and solicit acceptances of a plan of reorganisation.

However, in spite of IBC's hopes that an agreement with the Teamsters might also be reached, no such agreement had been announced before the 30 September deadline.