Huntington National Bank v. Sheridan Propco LLC et al

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
HUNTINGTON NATIONAL
BANK,
Plaintiff,
vs.
SHERIDAN PROPCO LLC et al.,
Defendants.
2:23-CV-11458-TGB-DRG
HON. TERRENCE G. BERG
OPINION AND ORDER
REQUIRING
SUPPLEMENTATION OF
RECEIVER’S MOTION FOR
ENTRY OF ORDER
AUTHORIZING SALE OF
RECEIVERSHIP
PROPERTY FREE AND
CLEAR OF ALL LIENS
(ECF NO. 25).
Before the Court is a motion by the Court-appointed Receiver, M.
Shapiro 	Management 	Company 	LLC, 	for 	the 	entry 	of 	an 	order
authorizing sale of the Receivership Property1 free and clear of all liens,
1 The Receivership Property comprises of two properties: (1) Land
situated in the City of Detroit, Wayne County, Michigan, described as:
Lots 1 and 2 of SUBDIVISION OF BLOCK NO. 100, CASS
FARM, according to the plat thereof recorded in Liber 1 of
Plats, Page 300, Wayne County Records.
Tax Item Nos. 000932-9/Ward 04; 002019.147/Ward 23
Commonly known as 4417 Second Avenue
and (2) Land situated in the City of Detroit, Wayne County, Michigan,
described as:
Lots 40 and East ½ of Lot 39 of WILLIAM A. BUTLER’S
SUBDIVISION of Out Lots 102, 104 & 106 and that part of
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in accordance with 28 U.S.C. §§2001–2002. ECF No. 25. Defendants filed
a response in opposition on October 8, 2025, ECF No. 28, and the Receiver
replied on October 13, 2025, ECF No. 30. For the following reasons, the
Court orders the Receiver to SUPPLEMENT the motion.
I. 	BACKGROUND
A. 	Procedural Background
On June 20, 2023, Plaintiff The Huntington National Bank filed the
instant action after Defendants Sheridan Propco LLC and Wellesley
Propco LLC defaulted on a loan in an original amount of $12,570,000.00
(the “Loan”). ECF No. 1, PageID.2; ECF No. 1-2 (Promissory Note).
Payment of the Loan was guaranteed by Defendants Michael Ouaknine
Living Trust Dated August 27, 2019, John Roberts Gibbs, and Michael
Ouaknine. ECF No. 1, PageID.5; ECF No. 1-6 (Guaranty of Payment).
The 	loan 	is 	secured 	by 	the 	commercial 	real 	estate 	comprising 	the
Receivership Property. Id. at PageID.4; ECF No. 1-2, PageID.29.
On June 23, 2023, the parties jointly stipulated to dismiss the case
without prejudice. ECF No. 5. The parties did so “[p]ursuant to a certain
forbearance agreement and related documents.” Id. at PageID.216.
Out Lot 108 lying South of the South line of Putnam Avenue
of the Subdivision of the Cass Farm, according to the plat
thereof recorded in Liber 11 of Plats, Page 89 of Wayne
County Records.
Tax Item Nos. 000990/Ward 04; 002019.148/Ward 23
Commonly known as 651 W. Hancock.
ECF No. 25, PageID.655–56.
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Under the terms of that forbearance agreement, the maturity date
of the loan was extended from December 22, 2023 to March 31, 2024. ECF
No. 6-3, PageID.249. “[A]s additional consideration to induce the Plaintiff
to forbear on its default remedies and prosecution of its Complaint filed
in 	this 	matter,” 	“[t]he 	Defendants 	agreed 	and 	consented 	to 	the
Appointment of the Receiver over the Borrower’s assets.” ECF No. 6,
PageID.221.
Subsequently, the Defendants defaulted on their obligations under
the settlement agreement. Id. at PageID.220.
On April 4, 2024, Plaintiff moved to reopen the case and for entry
of a consent order appointing receiver. Id. at PageID.217. On April 25,
2024, 	the 	Court 	granted 	the 	motion 	and 	entered 	a 	consent 	order
appointing a receiver. ECF No 7.
The consent order appointed M. Shapiro Management Company,
LLC (the “Receiver”) as the receiver “for Sheridan Propco LLC … and
Wellesley Propco LLC … (collectively the ‘Company’) and all of the real,
tangible 	and 	intangible 	property 	owned 	by 	the 	Company.” 	Id. 	at
PageID.317. Under the terms of the order, the Receiver was “ordered and
directed to take immediate and exclusive possession, custody and control
of the Receivership Estate.” Id. Additionally, the Receiver was authorized
“to transfer, sell, lease, license, exchange, collect or otherwise dispose of
Receivership Property.” Id. at PageID.325. As relevant here, the Receiver
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was deemed to be “a fiduciary for the benefit of all persons having or
claiming an interest in the Receivership Estate.” Id. at PageID.335.
On September 24, 2025, the Receiver filed a motion for the entry of
an order authorizing sale of the Receivership Property free and clear of
all liens. ECF No. 25. On October 8, 2025, Defendants filed a brief in
opposition of the motion. ECF No. 28. On October 13, 2025, the Receiver
replied. ECF No. 30.
On October 29, 2025, the Plaintiff filed a notice of submission of a
consent judgment. ECF No. 36. Plaintiff explained that while it had
initially planned to “defer entry of the Consent Judgment until after the
Receiver’s sale was completed, … “[c]ircumstances have changed.” Id. at
PageID.728. In the Notice, Plaintiff stated that it “supports approval of
the Receiver’s sale motion.” Id. at PageID.728.
On November 6, 2025, the Court entered the consent judgment.
ECF No. 38. The consent judgment stated that “[a] default has occurred
under the Forbearance Agreement, which default has been acknowledged
by Defendants.” 	Id. 	at PageID.748. Accordingly, the Court ordered,
adjudged, and decreed
that Judgment is entered in favor of Plaintiff Huntington
National Bank and against Defendants Sheridan Propco LLC,
a Michigan limited liability company, Wellesley Propco LLC,
a Michigan limited liability company, John R. Gibbs, an
individual, Michael Ouaknine, an individual, and the Michael
Ouaknine Living Trust Dated August 27, 2019, jointly and
severally, in the amount of $ $17,805,252.60 as of October 24,
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2025, plus interest thereon at 12.78217% per annum from the
date hereof.
Id. at PageID.749.
B. Proposed Sale of the Receivership Property
In 	the 	September 	24, 	2025 	motion 	for 	the 	entry 	of 	an 	order
authorizing sale of the Receivership Property free and clear of all liens,
the Receiver asked the Court to enter
an order authorizing the sale of the Receivership Property
free 	and 	clear 	of 	all 	mortgages, 	liens, 	claims 	and
encumbrances, 	with 	such 	mortgages, 	liens, 	claims 	and
encumbrances to be transferred to the proceeds of sale, having
the same validity and priority as existed prior to sale, with no
right of redemption available to any party.
ECF No. 25, PageID.654.
In the motion, the Receiver represents that it “obtained opinions of
value of three disinterested persons of the Receivership Property,” and
marketed the Receivership Property since December 3, 2024, utilizing
the Loopnet, Costar, MLS Realcomp and Crexi portals, email blasts and
hard copy flyers. As a result of the marketing efforts, the Receiver and/or
the broker conducted thirteen tours of the Receivership Property with
prospective purchasers and received nine offers for purchase.” Id. at
PageID.650–51.
These efforts bore fruit: the Receiver
procured an offer for the sale and purchase of the Receivership
Property for the sum of $9,000,000.00 from Tzvi Koslowe and
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Franz Ivezaj on behalf of an entity to be formed (the “Offer”),
on an ‘as is-where is, with all faults assumed’ basis, as set
forth in a purchase agreement dated August 27, 2025 (the
“Purchase Agreement”).
Id. at 651; ECF No. 27 (Purchase Agreement). The Offer and Purchase
Agreement also “provided that the prospective purchasers remit an
earnest money deposit of $100,000.00.” ECF No. 25, PageID.653. The
Receiver represents that this deposit “has already been received by the
title company to be utilized in the consummation of the transaction
should Court approval be obtained.” Id.
The Receiver represents that it
believes 	the 	proposed 	sale 	set 	forth 	in 	the 	Purchase
Agreement to be the highest and best, and would likely exceed
the bid amount which would be received at any public sale.
The proposed purchase price is over 80 percent of the average
valuation obtained by the Receiver from the disinterested
persons and therefore complies with the applicable provision
of 28 U.S.C. §2001(b).
Id. at PageID.651. The Receiver also represents that it
believes, in the reasonable exercise of its business judgment,
that the Offer constitutes the highest and best proposal for
the 	purchase 	of the 	Receivership Property 	which 	can 	be
expected, and that it should be accepted, as being in the best
interest 	of 	the 	receivership 	estate, 	and 	to 	minimize 	the
further 	expense 	to 	be 	incurred 	by 	and 	on 	behalf 	of 	the
Receiver.
Id. at PageID.653.
Additionally, the Receiver proposed
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that the net proceeds of sale, after payment of outstanding
taxes, commissions, and other customary closing costs, be
applied as follows:
A. 	First, to the payment of unpaid fees of the Receiver and
its professionals and any other expenses incurred by
the Receiver, less a reserve for reasonably anticipated
post-closing expenses;
B. 	Second, to the repayment of outstanding receivership
certificates, if any;
C. 	Third, to The Huntington National Bank, as successor
to TCF National Bank, until the indebtedness secured
by its mortgage has been fully satisfied;
D. 	Fourth, to the payment of any additional liens which
encumber the Receivership Property; and,
E. 	Fifth, to the Clerk of the Court, to be held pending the
further order of the Court.
Id. at PageID.653–54.
The Receiver also
proposes that notice of the sale, including the terms thereof,
be published once per week for four consecutive weeks prior
to closing in the Detroit Legal News, in compliance with 28
U.S.C. §2002, and that the Receiver thereafter be permitted
to file an affidavit with the Court confirming same, and to
proceed to closing without further order of the Court.
Id. at PageID.654.
Lastly, the Receiver
proposes that it file an affidavit of sale with the Clerk of the
Court within fifteen days of the closing, attesting to:
A. 	The date upon which closing of the sale was held;
B. 	The Receiver’s compliance with the conditions of the
order 	authorizing 	the 	sale 	of 	the 	Receivership
Property; and,
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C. 	The sale price.
Id. at PageID.654–55.
On October 8, 2025, Defendants filed a motion opposing Receiver’s
motion for the entry of an order authorizing sale of the Receivership
Property free and clear of all liens. ECF No. 28. Defendants argued that
“[t]he Receiver’s proposed $9,000,000.00 sale price is not the highest and
best offer available and therefore fails to satisfy the Receiver’s statutory
and 	fiduciary 	obligation 	to 	conserve 	the 	receivership 	estate’s 	best
interests.” Id. at PageID.682.
Specifically, Defendants “presented a higher and better offer to
acquire the Receivership Properties.” 	Id. 	at PageID.683. Defendants
attach this “offer” (“Defendants’ Offer”) to their opposition brief. ECF No.
28-2. Defendants’ Offer appears to be a document in which “Sturgeon Bay
Holding Company, LLC and/or a new entity” offers $9,500,000.00 for the
Receivership Property and a $100,000.00 “deposit at signing of Purchase
and Sale Agreement.” Id. at PageID.695. The document is signed by John
R. Gibbs and Michael Ouaknine, Managing Partners of Sturgeon Bay
Holding Company, LLC. Id. at PageID.28-2. These two men are the same
individuals who are listed as the guarantors of the debt secured by the
Receivership Property. See ECF No. 1-2; ECF No. 1-6.
Defendants argue that “[t]his fully financeable, unconditional offer
demonstrates that greater value and more favorable terms are readily
available to the estate. Proceeding at a lower price would cause a
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substantial and unnecessary loss to the Receivership Estate and its
creditors.” ECF No. 28, PageID.683.
In its October 13, 2024 reply, the Receiver argues that the “letter of
intent 	was 	not 	accompanied 	by 	a 	draft 	purchase 	agreement, 	and
significantly, offered no evidence that the prospective purchaser has the
financial wherewithal to consummate the transaction described in the
letter of intent.” ECF No. 30, PageID.699. The Receiver submits that
absent a purchase agreement which sets forth terms and
conditions 	at 	least 	comparable 	to 	those 	set 	forth 	in 	the
agreement for which approval is sought in the Motion, and
proof of immediately available funds to allow the transaction
to close … the Defendants’ objection to the sale should be
overruled, given the underlying loan history and the defaults
which resulted in the appointment of the Receiver.
Id.
II. LEGAL BACKGROUND
Federal Rule of Civil Procedure 66 governs the appointment of
receivers in 	federal 	court. 	That 	rule 	provides that “the 	practice 	in
administering an estate by a receiver or a similar court-appointed officer
must accord with the historical practice in federal courts or with a local
rule.” Fed. R. Civ. P. 66. “The role of the receiver is to safeguard disputed
assets, to suitably administer the receivership property, and to assist the
district court in achieving a final, equitable distribution of the assets.”
Liberte Cap. Grp., LLC v. Capwill, 248 F. App’x 650, 655 (6th Cir. 2007).
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Section 2001 of Title 28 of the United States Code governs the sale
of real property within a court-ordered receivership. Subdivision (b)
provides for the private sale of such real property. See § 2001(b). The
subdivision provides that
After a hearing, of which notice to all interested parties shall
be given by publication or otherwise as the court directs, the
court may order the sale of such realty or interest or any part
thereof at private sale for cash or other consideration and
upon such terms and conditions as the court approves, if it
finds that the best interests of the estate will be conserved
thereby. Before confirmation of any private sale, the court
shall appoint three disinterested persons to appraise such
property 	or 	different 	groups 	of 	three 	appraisers 	each 	to
appraise properties of different classes or situated in different
localities. No private sale shall be confirmed at a price less
than two-thirds of the appraised value. Before confirmation of
any private sale, the terms thereof shall be published in such
newspaper or newspapers of general circulation as the court
directs at least ten days before confirmation. The private sale
shall not be confirmed if a bona fide offer is made, under
conditions prescribed by the court, which guarantees at least
a 10 per centum increase over the price offered in the private
sale.
Id. Accordingly,
[w]hile § 2001(b) contains discretionary language that allows
courts to order the 	sale of realty “upon such terms and
conditions as the court approves, if it finds that the best
interests of the estate will be conserved thereby,” the statute
also includes mandatory language stating that (1) the court
“shall appoint” three appraisers, (2) “[n]o private sale shall be
confirmed at a price less than two-thirds of the appraised
value,” (3) the sale “shall be published” in newspapers at least
ten days before confirmation, and (4) the sale “shall not be
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confirmed” if a bona fide offer guaranteeing “at least a 10 per
centum increase” is made.
Huntington Nat. Bank v. Najero, Inc., No. 13-11632, 2014 WL 5473054,
at *1 (E.D. Mich. Oct. 27, 2014) (Cleland, J.); accord SEC v. Priv. Equity
Mgmt. Grp., LLC, No. 09-2901, 2009 WL 10676006, at *2 (C.D. Cal. Nov.
20, 2009).
However, while a court may not waive the mandatory requirements
of 	§ 2001(b), 	see, 	e.g., 	Najero, 	Inc., 	2014 	WL 	5473054, 	at 	*1 	(“The
permissive language allowing the Court discretion to determine what is
in the best interests of the estate is therefore limited by the minimum
standards delineated by Congress of what satisfies the best interest
standard. These standards cannot be waived by this Court.”), the parties
may — for instance, by stipulating to a receivership order, see Huntington
Nat’l Bank v. Big Sky Dev. Flint, LLC, No. 10-10346, 2010 WL 3702361,
at *7 (E.D. Mich. Sept. 16, 2010) (Cohn, J.); Najero, Inc., 2014 WL
5473054, at *2; Sec. & Exch. Comm’n v. EB5 Asset Manager, LLC, No.
15-62323, 2016 WL 7508252, at *2 (S.D. Fla. Mar. 25, 2016) (“While the
Court may not waive the mandatory requirements of § 2001(b), the
parties may.”); but see U.S. S.E.C. v. Wilson, No. 12-CV-15062, 2013 WL
1283437, at *2 (E.D. Mich. Mar. 28, 2013) (Ludington, J.) (holding that
the requirements of § 2001 may not be waived by the parties). Although
they have not done so here, parties may also “confer broad powers upon
the receiver up to and including the private sale of real property without
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§ 2001(b)’s formalities.” EB5 Asset Manager, LLC, 2016 WL 7508252, at
*2.
Moreover, in addition to the requirements of § 2001(b), a court must
also “find[] that the best interests of the estate will be conserved” by the
sale. § 2001(b). In assessing whether the “sale is fair in terms and result
and 	serves 	the 	best 	interests 	of 	the 	estate,” 	the 	court 	“has 	wide
discretion.” H&D Ent., Inc., 96 F.3d at 540; Sec. & Exch. Comm’n v.
Barton, 135 F.4th 206, 225 (5th Cir. 2025) (“It is a recognized principle of
law that the district court has broad powers and wide discretion to
determine the appropriate relief in an equity receivership.”); cf. Provident
Mut. Life Ins. Co. of Philadelphia v. Vinton Co., 282 Mich. 84, 89 (1937)
(“In foreclosure proceedings, the trial court has a broad discretion in
relation to confirmation; and a sale in conformity with the decree entered
will ordinarily be confirmed.”); see 65 Am. Jur. 2d Receivers § 214 (“The
court’s confirmation is an exercise of the court’s sound judicial discretion
in view of all the surrounding facts and circumstances and in the interest
of fairness, justice and rights of the respective parties, considering all
material facts and evidence and application of legal principles essential
to an informed, intelligent, and just decision.” (footnotes omitted)).
In assessing whether the “sale is fair in terms and result and serves
the best interests of the estate,” § 2001(b), a court may consider “whether
the price was fair and reasonable, and whether the sales process was
proper.” 65 Am. Jur. 2d Receivers § 214 (footnotes omitted); Fleet Nat.
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Bank v. H&D Ent., Inc., 96 F.3d 532, 540 (1st Cir. 1996); Michigan Tr.
Co. v. Cody, 264 Mich. 258, 263 (1933). However, “[a] court will not refuse
to confirm a private receiver’s sale for inadequacy of price alone.” 65 Am.
Jur. 2d Receivers § 214; cf. In re Prairie Coal Co., 40 F. Supp. 894, 895
(E.D. Ill. 1941) (“The courts do not ordinarily look with favor upon the
practice of withholding approval of sale from the highest bidder at a
public sale of bankruptcy assets where the sale was well attended, the
price 	bid 	not 	unreasonably 	low 	and 	the 	sale 	in 	all 	respects 	fairly
advertised and conducted. Particularly is this true where only a slightly
higher price is subsequently offered for the assets by one who had
opportunity to bid at the sale.”).
III. DISCUSSION
Before the Court is Receiver M. Shapiro Management Company
LLC’s 	motion 	for 	the 	entry 	of 	an 	order 	authorizing 	sale 	of 	the
Receivership Property free and clear of all liens, in accordance with 28
U.S.C. §§2001–2002. ECF No. 25. Defendants oppose the motion on the
ground that given the existence of a “higher and better offer to acquire
the Receivership Properties,” the Receiver’s proposed sale “is not the
highest 	and 	best 	offer 	available 	and 	therefore 	fails 	to 	satisfy 	the
Receiver’s statutory and fiduciary obligation to conserve the receivership
estate’s best interests.” ECF No. 28, PageID.682–83.
The Court begins by examining whether the sale complies with the
strictures of § 2001(b).
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First, § 2001(b) provides that “[b]efore confirmation of any private
sale, the court shall appoint three disinterested persons to appraise such
property 	or 	different 	groups 	of 	three 	appraisers 	each 	to 	appraise
properties 	of 	different 	classes 	or 	situated 	in 	different 	localities.”
§ 2001(b). Some courts have interpreted this language to permit the
receiver to submit valuations from appraisers to the reviewing court. See,
e.g., Sec. & Exch. Comm’n v. Fujinaga, No. 13-1658, 2017 WL 4369467,
at 	*1 (D. 	Nev. 	Oct. 	2, 	2017) (“The 	court 	held that 	‘the 	valuations
submitted by the receiver can constitute appraisals for the purpose of
satisfying the statutory requirements.’”); S.E.C. v. T-Bar Res., LLC, 07-
1994, 	2008 	WL 	4790987, 	at 	*3 	(N.D. 	Tex. 	Oct. 	28, 	2008). 	This
interpretation appears sound.
In the Receiver’s motion, the Receiver submits that “[c]onsistent
with the provisions of 28 U.S.C. §2001(b), the Receiver obtained opinions
of value of three disinterested persons of the Receivership Property.” ECF
No. 25, PageID.650. However, the Receiver has not submitted these
opinions or any further details as to the amount of these evaluations to
the Court. In the absence of being provided with these appraisals to
review, the Court is in no position to evaluate the fairness of the
Receiver’s proposed sale. As one court has explained:
[Section] 2001(b) … permits courts to authorize the private
sale of real property so long as the sale satisfies the best
interests standard. Id. But “[b]efore” courts may confirm such
a sale, they “shall” order three appraisals. Id. Section 2001(b)
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then instructs that a proposed price lower than two thirds of
the 	appraisal 	value 	may 	not 	be 	confirmed, 	id., 	thereby
deeming such a low number as counter to the best interests of
the estate. Congress thus, through the plain text of § 2001(b),
exercised its judgment of what satisfies the best interests
standard in consideration of the appraisal values. Courts,
therefore, 	shall 	similarly 	not 	pass judgment 	on 	the 	best
interests 	standard 	absent 	the 	benefit 	of 	the 	mandated
appraisals.
T-Bar Res., LLC, 2008 WL 4790987, at *3; accord Fujinaga, 2017 WL
4369467, at *1 (“However, the court was unable to determine whether
these three proposed individuals met the requirements of 28 U.S.C. §
2001(b) without in camera review of the valuations and the credentials
of the individuals.”); Wilson, 2013 WL 1283437, at *2 (“The court shall
appoint three appraisers — no ordering otherwise. No discretion, period.
Consequently, before authorizing the private sale of real property held
by 	Mr. 	Frank, 	three 	disinterested 	persons 	must 	be 	appointed 	as
appraisers.”).
On this ground alone, the Court cannot proceed to the next step.
See T-Bar Res., LLC, 2008 WL 4790987, at *3 (courts “shall similarly not
pass judgment on the best interests standard absent the benefit of the
mandated 	appraisals”). 	Thus, 	the 	Court 	will 	order 	the 	Receiver 	to
SUPPLEMENT its motion with the necessary appraisal information,
and any other information required under § 2001(b) within seven (7) days
of the date of this Order.
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Accordingly, at this time, the Court need not address whether “the
best interests of the estate will be conserved” by the sale. § 2001(b). Nor
will the Court address Defendants’ proposed “higher and better offer,”
ECF No. 28, PageID.683. Because the Managing Partners of the entity
making that offer — John R. Gibbs and Michael Ouknine — are listed as
guarantors for the loan secured by the Receivership Property and have
defaulted in this lawsuit, it seems unlikely that the best interest of the
estate will be served by allowing the defaulting guarantors to purchase
the Receivership Property. But the Court will reserve judgment on this
question until after a hearing in which all parties will be given the
opportunity to be heard.
IV. 	CONCLUSION
For the reasons above, the Receiver’s motion for the entry of an
order authorizing sale of the Receivership Property free and clear of all
liens, in accordance with 28 U.S.C. §§2001–2002 (ECF No. 25) is hereby
ordered to be SUPPLEMENTED with supporting evidence as described
herein by November 14, 2025.2
SO ORDERED.
2 Because Defendants do not raise the failure of the Receiver to abide by
the strictures of § 2001(b) — the only ground on which the Court rules
today — Defendants may file a response to any supplementation filed
by the Receiver within seven (7) days of the date such supplementation
is filed.
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Dated: November 10, 2025 	/s/Terrence G. Berg
HON. TERRENCE G. BERG
UNITED STATES DISTRICT JUDGE
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