Rouge had asked the court to name Severstal the "stalking horse." Last week, the company announced it had reached a purchase agreement with Severstal for $215 million.
The U.S. Bankruptcy Court in Wilmington, Delaware, identified the stalking horse to Dearborn, Michigan-based Rouge and set a timetable for Rouge's sale, spokesman William Hornberger said Monday. Competing bids will be accepted until Dec. 18, and an auction will be held on Dec. 19.
"We're very happy that we're now seeing the light at the end of the tunnel," Hornberger said.
Rouge filed for bankruptcy on Oct. 23.
Severstal, Russia's second-largest steel producer, must now negotiate a collective bargaining agreement with the United Auto Workers, which represents Rouge employees.
If Severstal and the UAW fail to reach an agreement, the Russian company can walk away from the deal, leaving Rouge with no committed opening bidder, Dow Jones Newswires reported.
Severstal must disclose whether it has reached an agreement with the union by Dec. 17.
Jerry Sullivan, president of UAW Local 600, said Monday that the union remains supportive of Severstal's bid.
"They intend to ... continue to make steel and employ the maximum number of our workers," he said.
For Severstal, Rouge would provide greater access to the U.S. market.
The intentions of another potential bidder, Pittsburgh-based United States Steel Corp., are less clear.
The company says it made Rouge an offer before its bankruptcy and that it remains interested "under the right circumstances."
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