October 2025 Memorandum

Troy, Michigan – As highlighted in our recent publications, receiverships remain a core focus of Simon PLC Attorneys & Counselors. Although most practitioners associate receiverships with state statutes—such as Michigan’s Receivership Act, its adoption of the Uniform Commercial Receivership Act in 2018 (MCL 554.1011 et seq.), and Michigan Court Rule 2.622—there is a lesser-known but equally powerful federal framework that governs the appointment and authority of receivers in federal court.

Federal receiverships are well known in the context of actions brought by agencies like the SEC or FTC, but private parties may also seek the appointment of a receiver under Fed. R. Civ. P. 66 and 28 U.S.C. § 3103 and related provisions. While not often used by creditors, federal receiverships provide most of the advantages of their state-law counterparts—and in certain circumstances, offer distinct strategic benefits.

Public and Private Sales in Federal Receiverships

As with state receivers, a receiver appointed by a federal court may conduct both public and private sales of real property.
• Public sales fall under 28 U.S.C. §§ 2001(a) and 2002, which require:
– the sale to occur at the courthouse in the district where most of the property lies,
– terms and conditions established by the court, and
– publication of notice once per week for four consecutive weeks in a local newspaper.

• Private sales are governed by 28 U.S.C. § 2001(b), which requires:
– appointment of three independent appraisers,
– a minimum sale price of two-thirds of the appraised value, and
– publication of the proposed terms at least ten days before the sale is confirmed.

Why Federal Court? The Advantages of Nationwide Reach

One of the most significant benefits of a federal receivership is its geographic reach. Under 28 U.S.C. §§ 3103(b) and 754, a federal court may authorize a receiver to take control of assets located in multiple states. This is particularly useful when a debtor holds real property or personal assets spread across several jurisdictions, each of which might have different or conflicting receivership laws.

State-law remedies—including state receiverships and assignments for the benefit of creditors—are generally limited to assets physically located within that specific state. Creditors dealing with multi-state assets are often forced to launch multiple actions and coordinate with various local counsel. A federal receivership eliminates that fragmentation: one federal judge, applying a single legal framework, can oversee the entire asset pool across state borders.

Jurisdictional Considerations

Because federal courts are courts of limited jurisdiction, a creditor must establish an appropriate basis for federal court involvement—most commonly diversity jurisdiction. While this requirement can sometimes pose a challenge, federal courts often operate with shorter dockets and fewer procedural delays, which may ultimately benefit the creditor. Thus, the difficulty of establishing jurisdiction can be outweighed by the efficiencies gained from consolidated federal oversight.

When Federal Receivership Is the Right Tool

Although a federal receivership may not be the first remedy creditors consider when seeking liquidation of collateral, it can be highly effective—particularly when the assets are dispersed among several states. A federal district court’s ability to centralize authority, simplify administration, and avoid duplicative proceedings often makes it the most efficient choice. As always, the suitability of any remedy depends on the specific circumstances of the matter at hand.

Simon PLC Attorneys & Counselors is uniquely positioned to evaluate these options and craft a receivership strategy—state or federal—designed to maximize recovery and streamline administration.

Disclaimer

This memorandum is provided for informational purposes only and does not constitute legal advice. Please contact us to discuss the facts of your specific matter. Simon PLC Attorneys & Counselors disclaims all liability for actions taken or not taken based on the content of this memorandum. The information provided may not reflect the most recent legal developments. Laws vary by jurisdiction, and recipients should consult qualified counsel licensed in the relevant state before taking any action. Our attorneys do not seek to practice law in jurisdictions where they are not authorized.