Michigan Laws 554.1026 – “Good faith” defined; use or transfer of receivership property not in ordinary course of business
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Terms Used In Michigan Laws 554.1026
- Court: means the circuit court. See Michigan Laws 554.1012
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Lien: A claim against real or personal property in satisfaction of a debt.
- Lien: means an interest in property that secures payment or performance of an obligation. See Michigan Laws 554.1012
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: means an individual, estate, business or nonprofit entity, public corporation, government or governmental subdivision, agency, or instrumentality, or other legal entity. See Michigan Laws 554.1012
- Proceeds: means any of the following property:
(i) Whatever is acquired on the sale, lease, license, exchange, or other disposition of receivership property. See Michigan Laws 554.1012Property: means all of a person's right, title, and interest, both legal and equitable, in real property, personal property, and fixtures tangible and intangible, wherever located and however acquired. See Michigan Laws 554.1012 Receiver: means a person appointed by the court as the court's agent, and subject to the court's direction, to take possession of, manage, and, if authorized by this act or court order, transfer, sell, lease, license, exchange, collect, or otherwise dispose of receivership property. See Michigan Laws 554.1012 Receivership: means a proceeding in which a receiver is appointed. See Michigan Laws 554.1012 Receivership property: means the property of an owner that is described in the order appointing a receiver or a subsequent order. See Michigan Laws 554.1012
(1) As used in this section, “good faith” means honesty in fact and the observance of reasonable commercial standards of fair dealing.
(2) With court approval, a receiver may use receivership property other than in the ordinary course of business.
(3) With court approval, and after notice and an opportunity for a hearing is given to all creditors and other known interested parties unless the court orders otherwise for cause, a receiver may transfer receivership property other than in the ordinary course of business by sale, lease, license, exchange, or other disposition. Unless the agreement of sale provides otherwise, a sale under this section is free and clear of a lien of the person that obtained appointment of the receiver, any subordinate lien, and any right of redemption but is subject to a senior lien.
(4) A lien on receivership property that is extinguished by a transfer under subsection (3) attaches to the proceeds of the transfer with the same validity, perfection, and priority the lien had on the property immediately before the transfer, even if the proceeds are not sufficient to satisfy all obligations secured by the lien.
(5) A transfer under subsection (3) may occur by means other than a public auction sale. A creditor holding a valid lien on the property to be transferred may purchase the property and offset against the purchase price part or all of the allowed amount secured by the lien, if the creditor tenders funds sufficient to satisfy in full the reasonable expenses of transfer and the obligation secured by any senior lien extinguished by the transfer.
(6) A reversal or modification of an order approving a transfer under subsection (3) does not affect the validity of the transfer to a person that acquired the property in good faith or revive against the person any lien extinguished by the transfer, whether the person knew before the transfer of the request for reversal or modification, unless the court stayed the order before the transfer.