Rule 2.622 Receivers

(A)   Appointment of Receiver. Upon the motion of a party or on its own initiative, and for good cause shown, the court may appoint a receiver as provided by law. A receiver appointed under this section is a fiduciary for the benefit of all persons appearing in the action or proceeding. For purposes of this rule, “receivership estate” means the entity, person, or property subject to the receivership.

(B)   Selection of Receiver. If the court determines there is good cause to appoint a receiver, the court shall select the receiver in accordance with this subrule. Every receiver selected by the court must have sufficient competence, qualifications, and experience to administer the receivership estate.

(1)   Stipulated Receiver or No Objection Raised. The moving party may request, or the parties may stipulate to, the selection of a receiver. The moving party shall describe how the nominated receiver meets the requirement in subsection (B) that a receiver selected by the court have sufficient competence, qualifications, and experience to administer the receivership estate, considering the factors listed in subsection (B)(5). If the nonmoving party does not file an objection to the moving party’s nominated receiver within 14 days after the petition or motion is served, or if the parties stipulate to the selection of a receiver, the court shall appoint the receiver nominated by the party or parties, unless the court finds that a different receiver should be appointed.

(2)   Receiver Appointed Sua Sponte. If the court appoints a receiver on its own initiative, any party may file objection to the selected receiver and submit an alternative nominee for appointment as receiver within 14 days after the order appointing the receiver is served. The objecting party shall describe how the alternative nominee meets the requirement in subsection (B) that a receiver selected by the court have sufficient competence, qualifications, and experience to administer the receivership estate, considering the factors listed in subsection (B)(5).

(3)   Reduction in Time to Object. The court, for good cause shown, may in its discretion, with or without motion or notice, order the period for objection to the selected receiver reduced.

(4)   Objections. The party filing an objection must serve it on all parties as required by MCR 2.107, together with a notice of hearing.

(5)   If a party objects under subsection (B)(2) or the court makes an initial determination that a different receiver should be appointed than the receiver nominated by a party under subsection (B)(1), the court shall state its rationale for selecting a particular receiver after considering the following factors:

(a)   experience in the operation and/or liquidation of the type of assets to be administered;

(b)   relevant business, legal and receivership knowledge, if any;

(c)   ability to obtain the required bonding if more than a nominal bond is required;

(d)   any objections to any receiver considered for appointment;

(e)   whether the receiver considered for appointment is disqualified under subrule (B)(6); and

(f)   any other factor the court deems appropriate.

(6)   Except as otherwise provided by law or by subrule (B)(7), a person or entity may not serve as a receiver or in any other professional capacity representing or assisting the receiver, if such person or entity:

(a)   is a creditor or a holder of an equity security of the receivership estate:

(b)   is or was an investment banker for any outstanding security of the receivership estate;

(c)   has been, within three years before the date of the appointment of a receiver, an investment banker for a security of the receivership estate, or an attorney for such an investment banker, in connection with the offer, sale, or issuance of a security of the receivership estate;

(d)   is or was, within two years before the date of the appointment of a receiver, a director, an officer, or an employee of the receivership estate or of an investment banker specified in subrule (b) or (c) of this section, unless the court finds the appointment is in the best interest of the receivership estate and that there is no actual conflict of interest by reason of the employment;

(e)   has an interest materially adverse to the interest of any class of creditors or equity security holders by reason of any direct or indirect relationship to, connection with, or interest in the receivership estate or an investment banker specified in subrule (b) or (c) of this section, or for any other reason;

(f)   has or represents an interest adverse to the receivership estate or stands in any relation to the subject of the action or proceeding that would tend to interfere with the impartial discharge of duties as an officer of the court.

(g)   has, at any time within five years before the date of the appointment of a receiver, represented or been employed by the receivership estate or any secured creditor of the receivership estate as an attorney, accountant, appraiser, or in any other professional capacity and the court finds an actual conflict of interest by reason of the representation or employment;

(h)   is an “insider” as defined by MCL 566.31(g);

(i)   represents or is employed by a creditor of the receivership estate and, on objection of an interested party, the court finds an actual conflict of interest by reason of the representation or employment; or

(j)   has a relationship to the action or proceeding that will interfere with the impartial discharge of the receiver’s duties.

(7)   Any person who has represented or has been employed by the receivership estate is eligible to serve for a specified limited purpose, if the court determines such employment or appointment is in the best interest of the receivership estate and if such professional does not represent or hold an interest materially adverse to the receivership estate.

(C)   Order of Appointment. The order of appointment shall include provisions related to the following:

(1)   bonding amounts and requirements as provided in subrule (G);

(2)   identification of real and personal property of the receivership estate;

(3)   procedures and standards related to the reasonable compensation of the receiver as provided in subrule (F);

(4)   reports required to be produced and filed by the receiver, including the final report and accounting;

(5)   a description of the duties, authority and powers of the receiver;

(6)   a listing of property to be surrendered to the receiver; and

(7)   any other provision the court deems appropriate.

(D)   Duties.

(1)   Within 7 days after entry of the order of appointment, the receiver shall file an acceptance of receivership with the court. The acceptance shall be served on all parties to the action.

(2)   Unless otherwise ordered, within 28 days after the filing of the acceptance of appointment, the receiver shall provide notice of entry of the order of appointment to any person or entity having a recorded interest in all or any part of the receivership estate.

(3)   The receiver shall file with the court an inventory of the property of the receivership estate within 35 days after entry of the order of appointment, unless an inventory has already been filed.

(4)   The receiver shall account for all receipts, disbursements and distributions of money and property of the receivership estate.

(5)   If there are sufficient funds to make a distribution to a class of creditors, the receiver may request that each creditor in the class of all creditors file a written proof of claim with the court. The receiver may contest the allowance of any claim.

(6)   The receiver shall furnish information concerning the receivership estate and its administration as reasonably requested by any party to the action or proceeding.

(7)   The receiver shall file with the court a final written report and final accounting of the administration of the receivership estate.

(E) Powers.

(1) Except as otherwise provided by law or by the order of appointment, a receiver has general power to sue for and collect all debts, demands, and rents of the receivership estate, and to compromise or settle claims.

(2) A receiver may liquidate the personal property of the receivership estate into money. By separate order of the court, a receiver may sell real property of the receivership estate.

(3) A receiver may pay the ordinary expenses of the receivership but may not distribute the funds in the receivership estate to a party to the action without an order of the court.

(4) A receiver may only be discharged on order of the court. 

(F)   Compensation and Expenses of Receiver.

(1)   A receiver shall be entitled to reasonable compensation for services rendered to the receivership estate.

(2)   The order appointing a receiver shall specify:

(a)   the source and method of compensation of the receiver;

(b)   that interim compensation may be paid to the receiver after notice to all parties to the action or proceeding and opportunity to object as provided in subsection (5);

(c)   that all compensation of the receiver is subject to final review and approval of the court.

(3)   All approved fees and expenses incurred by a receiver, including fees and expenses for persons or entities retained by the receiver, shall be paid or reimbursed as provided in the order appointing the receiver.

(4)   The receiver shall file with the court an application for payment of fees and the original notice of the request. The notice shall provide that fees and expenses will be deemed approved if no written objection is filed with the court within 7 days after service of the notice. The receiver shall serve the notice and a copy of the application on all parties to the action or proceedings, and file a proof of service with the court.

(5)   The application by a receiver, for interim or final payment of fees and expenses, shall include:

(a)   A description in reasonable detail of the services rendered, time expended, and expenses incurred;

(b)   The amount of compensation and expenses requested;

(c)   The amount of any compensation and expenses previously paid to the receiver;

(d)   The amount of any compensation and expenses received by the receiver from or to be paid by any source other than the receivership estate;

(e)   A description in reasonable detail of any agreement or understanding for a division or sharing of compensation between the person rendering the services and any other person except as permitted in subpart (6).

If written objections are filed or if, in the court’s determination, the application for compensation requires a hearing, the court shall schedule a hearing and notify all parties of the scheduled hearing.

(6)   A receiver or person performing services for a receiver shall not, in any form or manner, share or agree to share compensation for services rendered to the receivership estate with any person other than a firm member, partner, employer, or regular associate of the person rendering the services except as authorized by order of the court.

(G) Bond.

In setting an appropriate bond for the receiver, the court may consider factors including but not limited to:

(1)   The value of the receivership estate, if known;

(2)   The amount of cash or cash equivalents expected to be received into the receivership estate;

(3)   The amount of assets in the receivership estate on deposit in insured financial institutions or invested in U.S. Treasury obligations;

(4)   Whether the assets in the receivership estate cannot be sold without further order of the court;

(5)   If the receiver is an entity, whether the receiver has sufficient assets or acceptable errors and omissions insurance to cover any potential losses or liabilities of the receivership estate;

(6)   The extent to which any secured creditor is undersecured;

(7)   Whether the receivership estate is a single parcel of real estate involving few trade creditors; and

(8)   Whether the parties have agreed to a nominal bond.

(H)   Intervention. An interested person or entity may move to intervene. Any motion to intervene shall comply with MCR 2.209.

(I)   Removal of Receiver. After notice and hearing, the court may remove any receiver for good cause shown.