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Where a plaintiff bank has moved for the appointment of a receiver, that motion should be denied without prejudice because there are numerous material factual disputes that preclude the appointment of a receiver at this early stage.
“On September 23, 2025, Independent Bank filed a verified complaint seeking contract damages, judicial foreclosure of several mortgages, and the appointment of a receiver. Filed concurrently with the complaint was an emergency ex parte motion requesting the immediate appointment of a receiver. Under the Receivership Act, MCL 554.1011-1040, a court may appoint a receiver without notice — or with notice but without a hearing — under certain limited circumstances.
“Defendants characterize the Bank’s receivership motion as a bad-faith attempt to circumvent a recently executed Forbearance Agreement that was intended to provide them breathing room until November 15, 2025. Defendants contend there is no genuine emergency, no threat to the Bank’s collateral, and that the alleged defaults cited by the Bank were either known before the Forbearance Agreement was signed or have since been cured. Defendants position themselves as responsible developers who have transformed a contaminated, abandoned industrial site into a thriving $85 million mixed-use development that now employs 150 people. They argue that the Bank’s aggressive posture — including refusing to release $600,000 of the borrowers’ own cash — has actually exacerbated the Project’s short-term cash flow problems rather than protected the Bank’s interests.
“Of course, Independent Bank is asking this court to appoint a receiver without conducting a hearing.
“As a general rule, a court need not always hold a formal hearing before appointing a receiver. Hofmeister v. Randall, 124 Mich. App. 443, 447, 335 N.W.2d 65, 67-68 (1983). But the appointment of a receiver without a hearing is typically confined to situations where the underlying facts are undisputed. … That is not the case here.
“Here, there are numerous material factual disputes that preclude the appointment of a receiver at this early stage. The parties sharply disagree over the current value of the Bank’s collateral, the financial viability of the Project, the cause and extent of any liquidity’ problems, and whether any uncured events of default presently exist. They also dispute the effect of the August 22, 2025 Forbearance Agreement, including whether it bars this action until November 15, 2025, and whether the Bank’s motion was brought in good faith. The evidence concerning prospective risk of deterioration and the likely impact of receivership on the Project’s value is likewise conflicting. These questions cannot be resolved on affidavits and argument alone, and must instead be determined at trial upon a full evidentiary record.
“Plaintiff’s motion for the appointment of a receiver is denied without prejudice. The court will schedule an informal status conference to schedule a hearing date and to establish a briefing schedule.”
