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New Michigan Receivership Act

Receivership ActOn October 15, 2020, the State of Michigan adopted a newly revised receivership act titled “Receivership Act”.  The newly re-written act expands and clarifies the prior Michigan “Uniform Commercial Real Estate Receivership Act” (“UCRERA”).  The prior Act was designed to apply to, as the name implies, commercial real estate.  The new Act can also be applied to commercial loans that do not involve real estate.  It is designed to make the appointment of a receiver more accessible.  It also is more specific about how a receiver is appointed, their qualifications and the duties and obligations of the parties.  It also provides for greater transparency and notices to creditors.  The new law can be used as an alternative for bankruptcy is some cases.  Some of the highlights of the law are as follows:

      • The Owner is required to furnish a detailed list of all creditors to the Receiver.
      • The Receiver is required to send notice to all creditors within seven days of receiving the list.
      • The law requires quarterly reporting. Although, I personally favor monthly reporting.
      • A Receiver can be appointed by a court in the enforcement of a lien or security agreement when a borrower has agreed to it in the loan documents.
      • There is a clear process for the appointment of a Receiver by a court or the parties.
      • It requires notice and the opportunity for a hearing before property can be sold from the receivership estate.
      • A Receiver can “claw back” fraudulent transfers but not preference payments as in bankruptcy.
      • A Receiver can operate a business.
      • A Receiver can compel a person to testify under oath and to produce records or tangible things that relate to the receivership property.
      • The Receiver can reject executory contracts.
      • A Receiver can recommend the allowance or disallowance of a creditors claim.
      • The appointment of a Receiver acts as a stay of any action seeking to enforce a claim or lien on the receivership property.
      • Under certain circumstances, a Receiver may transfer or sell receivership property free and clear of liens.
      • A Receivership can now include not only commercial real property and the associated personal property but any commercial personal property such as a business and its books, records and accounts.

With this latest revision, the drafters have made progress in establishing a receivership law that comes closer to a uniform law that will someday be applicable to all receivership situations.  In the meantime, this one will do nicely.


Kevin M. Burke, CTP

Burke Advisory Services

 October 27, 2020


Kevin Burke is a member of the Turnaround Management Association and a Certified Turnaround Professional.  A graduate of the Villanova School of Business, he has over 35 years of experience in banking and executive management.  His management consulting practice is located in Troy, Michigan.