BIDDEFORD – The union representing Biddeford Textile Corp. workers and the partnership that hopes to buy the business have agreed to negotiate a new labor contract.

The development allows the blanket maker’s Chapter 11 bankruptcy reorganization to continue.

“We’re confident we can reach an agreement and let the plan go through,” said John Beal, a lawyer for the Union of Needletrade Industrial and Textile Employees, or UNITE.

A lawyer for Microlife Corp., the Taiwanese company that heads the purchasing group, told a federal bankruptcy judge in Portland last week that the group’s costs are mounting.

Robert Michael warned that the partnership, known as Biddeford Acquisitions or Biddeford Blankets, would seek to liquidate its debts by filing for Chapter 7 bankruptcy if it could not reach an agreement with the union.

Microlife offered to buy the mill for $5.8 million, but said the union’s demand for $200,000 in stock options and $300,000 in unpaid medical claims would make the deal unprofitable, Michael said.

Biddeford Textile laid off 350 workers last February and filed for bankruptcy protection a month later.

The company later resumed its operations and now is operating with about 250 workers.

The partnership offered last month to pay $5.8 million to buy the blanket maker’s assets and keep the company operating in Biddeford.

Unsecured creditors also reached an agreement with the partnership. The creditors had asked the judge last week to appoint an independent examiner to review Biddeford Textile’s books.

Len Gulino, the lawyer representing the creditors, said Biddeford Textile agreed to ask for a court-appointed accountant to examine and help clarify the company’s complex finances.

The accountant would help verify an amended reorganization plan, which would need approval from the judge and the creditors.