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The Use of Receiverships in Michigan

Most people recognize the considerable rights a creditor gains to satisfy a judgment if one is entered on their behalf. A judgment can result in harm to your credit score, lead to unpleasant creditor’s exams where you will be required to give testimony under oath about your assets, result in wage and tax garnishments, and even liens against your assets. Suffice it to say, once a judgment is entered against you, the law affords your creditor a wide range of measures and tools to collect.

What is a Receiver in the Legal Context?

A receiver is an officer of the court, appointed by the court, to take possession, custody, and control of specified assets and to sell or otherwise dispose of the assets. The assets over which the receiver has possession and control are collectively called the “receivership estate.” MCR 2.622(A).

The purpose of a receiver can vary depending on the context in which a receiver was appointed. For example, as indicated above, judgment creditors have the ability to seek appointment of a receiver over a judgment debtor to secure and sell assets to satisfy the judgment. Receivers are also authorized under Michigan’s Construction Lien Act, MCL 570.1101, et seq., to take possession of real property subject to a lien or mortgage, and to sell it. Courts have authority to appoint receivers over insolvent or dissolving corporations as well.

Once appointed, a receiver has broad powers to sue and collect debts for the benefit of the receivership estate, to liquidate real and personal property, and even settle claims on behalf of the receivership estate. Necessary to this role is a complete understanding of the assets and financials of the receivership estate, which often results in a thorough and careful examination of documents and records by the receiver to uncover hidden or improperly transferred assets.

Speak With an Attorney to Avoid a Receiver

You do not want to get to a point where a receiver is taking control of you or your company’s assets. The first step to avoiding such a scenario is to speak to an attorney about any pending litigation to determine how best to avoid the entry of a judgment against you. In the case of a receiver appointed over a judgment debtor, if a receiver is being appointed, it is likely too late to set aside the underlying judgment. You should act quickly.

The appointing of a receiver is not a foregone conclusion either. Even if a party seeks the appointment of a receiver over your assets, there are defenses that can be raised. After speaking with a qualified attorney, bankruptcy may be an option available to you. Other defenses such as defects in pleadings, or insufficient evidence to support the drastic measure of appointing a receiver, may also apply.

If a receiver is appointed, your attorney will also need to ensure that assets taken by the receiver are sold at a fair price.

Contact Experienced Bloomfield Hills Attorneys Today

You will need a skilled advocate on your behalf to help navigate you through this challenging time. One of our attorneys will be happy to assist you. Contact Us today.

About the Author: Y. Moin Ghadimi is an associate attorney at The Cronin Law Firm. His areas of practice include civil and commercial litigation, business and corporate law, employment law, estate planning, real estate transactions, mergers & acquisitions, landlord-tenant law, and personal injury.  

The Cronin Law Firm specializes in family law, business law, criminal defense, estate planning, bankruptcy law, immigration, entertainment law, personal injury, real estate, and employment law. For more information, click the blue “Send Us A Text Message!” ​ button on this page, complete our contact form, or call us at 248-258-3500​.

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