A receiver is a court-appointed expert (usually, but not always, a lawyer) responsible for managing assets to (a) preserve them for a later division by the family court or (b) manage them consistently with a judgment.
In considering a proposed receiver, the court may, but need not, defer to the petitioning party’s selection. Even in a case where the appointment is stipulated to or uncontested, the court has the final say. By law, “the court shall appoint the receiver nominated by the party . . . unless the court finds that a different receiver should be appointed.” After the court makes an “initial determination” that a different receiver should be appointed, it must “state its rationale” for the appointment, taking into account the same criteria that the parties were required to use in their receiver proposal.
Qualifications - The receiver court rule, MCR 2.622, requires a receiver to have “sufficient competence, qualifications, and experience to administer the receivership estate.” The party seeking appointment of a receiver must describe how the proposed receiver is qualified according to specified factors, including experience in the operation or liquidation of the type of assets to be administered, relevant business, legal and receivership knowledge, and the ability to obtain a bond. The amended rule also lists 10 provisions addressing when a proposed receiver is disqualified from serving
Compensation- The receiver court rule also contains a provision dealing with the manner in which receivers are to be compensated. The order of appointment must identify “the source and method of compensation of the receiver,” and the order must provide that interim compensation may be paid to the receiver, but that all compensation is “subject to final review and approval of the court.” A receiver must file an application for fees with the court, and if no objection is filed, the application may provide for the fees to be deemed approved after the seven day objection period passes.
A family court should not appoint a receiver absent a party’s failure to comply with its orders and, even then, in only the most extreme cases. The purpose of appointing a receiver is to preserve property and to dispose of it under the order of the court. A receiver should only be appointed in extreme cases. While a party’s past unimpressive performance may justify the trial court in appointing a receiver, the party’s compliance with orders, should lead the family court to decline a receivership. Reed v Reed, 265 Mich App 131, 161-162; 693 NW2d 825 (2005) (quotation marks and citations omitted); see also Cohen v Cohen, 125 Mich App 206, 214; 335 NW2d 661 (1983) (noting that “[t]he appointment of a receiver may be appropriate when other approaches have failed to bring about compliance with the court’s orders”).