Farm Debt Mediation Act (S.C. 1997, c. 21)

Short Title

Marginal note:Short title

1 This Act may be cited as the Farm Debt Mediation Act.

Interpretation

Marginal note:Definitions

2 The definitions in this section apply in this Act.

farmer

farmer means any person, cooperative, partnership or other association of persons that is engaged in farming for commercial purposes and that meets any prescribed criteria. (agriculteur)

farming

farming means

• (a) the production of field-grown crops, cultivated and uncultivated, and horticultural crops;

• (b) the raising of livestock, poultry and fur-bearing animals;

• (c) the production of eggs, milk, honey, maple syrup, tobacco, fibre, wood from woodlots and fodder crops; and

• (d) the production or raising of any other prescribed thing or animal. (exploitation d’une entreprise agricole)

Minister

Minister means the Minister of Agriculture and Agri-Food. (ministre)

prescribed

prescribed means prescribed by regulation.

secured creditor

secured creditor means

• (a) any creditor holding a mortgage, hypothec, pledge, charge, lien, privilege, priority claim or other security interest on or against the property of a farmer or any part thereof as security for a debt due or accruing due from the farmer;

• (b) any person, cooperative, partnership or other association of persons

  • (i) with which a farmer has entered into an agreement for sale, a lease with an option to purchase or a conditional sales contract relating to any property used or possessed by the farmer, or

  • (ii) to which such an agreement or contract has been assigned; and

• (c) any bank, or authorized foreign bank within the meaning of section 2 of the Bank Act to which security on the property of a farmer or any part of the property has been given under section 427 of that Act or under section 427 as incorporated by section 555 of that Act, as the case may be. (créancier garanti)

Her Majesty

Marginal note:Binding on Her Majesty

3 This Act is binding on Her Majesty in right of Canada or a province.

Administrators

Marginal note:Appointment

• 4 (1) Subject to subsection (2), administrators shall be appointed for the purposes of this Act in accordance with the Public Service Employment Act.

• Marginal note:Designation

  (2) The Minister may, in accordance with the regulations, if any, and on such terms and conditions as the Minister may specify, designate any person, other than an employee within the meaning of the Public Service Employment Act, as an administrator for the purposes of this Act.

• Marginal note:Agreements

  (3) For the purposes of this Act, the Minister may enter into an agreement with any individual or body in relation to the remuneration and travel and living expenses of administrators designated under subsection (2).

• Marginal note:Mediators, experts

  (4) An administrator may enter into agreements

  • (a) for the services of mediators, subject to the regulations, and

  • (b) for the services of experts

  relating to applications made under section 5, and such agreements may include provision for remuneration and travel and living expenses.

Applications

Marginal note:Application to administrator

• 5 (1) Subject to section 6, a farmer may apply to an administrator for either

  • (a) a stay of proceedings against the farmer by all the farmer’s creditors, a review of the farmer’s financial affairs, and mediation between the farmer and all the farmer’s creditors for the purpose of assisting them to reach a mutually acceptable arrangement; or

  • (b) a review of the farmer’s financial affairs, and mediation between the farmer and all the farmer’s secured creditors for the purpose of assisting them to reach a mutually acceptable arrangement.

• Marginal note:Names of creditors

  (2) An application under subsection (1) must include the names and addresses of all the farmer’s creditors.

Marginal note:Farmer must be insolvent

6 Only farmers

• (a) who are for any reason unable to meet their obligations as they generally become due,

• (b) who have ceased paying their current obligations in the ordinary course of business as they generally become due, or

• (c) the aggregate of whose property is not, at a fair valuation, sufficient, or if disposed of at a fairly conducted sale under legal process would not be sufficient, to enable payment of all their obligations, due and accruing due

are eligible to apply under section 5.

Marginal note:Administrator’s duties on receiving application

• 7 (1) On receipt of a duly completed application under section 5, the administrator shall forthwith

  • (a) give notice of the application to

    • (i) each creditor listed in the application, in the case of an application made under paragraph 5(1)(a),

    • (ii) each secured creditor listed in the application, in the case of an application made under paragraph 5(1)(b), and

    • (iii) the Minister, if the Minister is the guarantor of a farmer’s debt that is owed to a creditor or secured creditor listed in the application;

  • (b) in the case of an application made under paragraph 5(1)(a), issue a stay of proceedings for a period of 30 days, beginning at the time when the stay is issued, against the farmer by all of the farmer’s creditors and give notice of the stay to each creditor listed in the application; and

  • (c) determine whether the farmer is eligible under this Act to make that application, which determination may be based on, among other things, a preliminary review of the farmer’s financial affairs.

• Marginal note:Certain decisions final

  (2) In the case of an application under paragraph 5(1)(b), a determination by the administrator under paragraph (1)(c) is final and is not subject to appeal.

Marginal note:Amendment of application

• 8 (1) A farmer who has made an application under paragraph 5(1)(a) or (b) may, at any time before the termination of the mediation, request permission from the administrator to amend the application to be an application under paragraph 5(1)(b) or (a), as the case may be, and the administrator may grant that permission if satisfied that the farmer is eligible to apply under paragraph 5(1)(b) or (a), as the case may be.

• Marginal note:Two year period

  (2) For the purposes of section 20, an application that has been amended pursuant to subsection (1) is deemed to have been made as an application under paragraph 5(1)(b) or (a), as the case may be, on the day when the original application was made.

Financial Review

Marginal note:Financial review

• 9 (1) Where the administrator determines that the farmer is eligible to make the application, the administrator shall as soon as possible undertake, or cause an expert referred to in subsection 4(4) to undertake, a detailed review of the farmer’s financial affairs.

• Marginal note:Nature of review

  (2) The review mentioned in subsection (1)

  • (a) must include the preparation of

    • (i) an inventory of all the assets of the farmer, and

    • (ii) financial statements of the farmer’s farming operation;

  • (b) may, in the case of an application made under paragraph 5(1)(b), include a recommendation that one or more creditors who are not secured creditors, and the Minister, if the Minister is the guarantor of a farmer’s debt that is owed to one of those creditors, participate in the mediation; and

  • (c) may include the preparation of recovery plans for the purpose of reaching financial arrangements with creditors and the Minister.

• Marginal note:Preparation of recovery plans

  (3) Where a farmer requests the administrator that the recovery plans referred to in paragraph (2)(c) be prepared by a person of the farmer’s choice, the administrator may, in accordance with the regulations, if any, enter into an agreement for that purpose.

• Marginal note:Report

  (4) The results of a review under this section must take the form of a report prepared by or on behalf of the administrator.

Mediation

Marginal note:Appointment of mediator

• 10 (1) Forthwith after the report mentioned in subsection 9(4) has been prepared, the administrator shall

  • (a) in accordance with the regulations, appoint as a mediator any person who is unbiased and free from any conflict of interest relative to the application in question;

  • (b) inform

    • (i) in the case of an application made under paragraph 5(1)(a), the farmer, all of the creditors listed in the application and the Minister, if the Minister was given notice of the application by the administrator under subparagraph 7(1)(a)(iii), of the mediator’s appointment, or

    • (ii) in the case of an application made under paragraph 5(1)(b), the farmer, all of the secured creditors listed in the application, all of the creditors mentioned in a recommendation under paragraph 9(2)(b) and the Minister, if the Minister was given notice of the application by the administrator under subparagraph 7(1)(a)(iii) or is mentioned in the recommendation, of the mediator’s appointment; and

  • (c) provide a copy of the report mentioned in subsection 9(4) to the mediator and to the persons and entities that will be participating in the mediation.

• Marginal note:Duties of mediator

  (2) In accordance with the regulations, the mediator shall examine the report mentioned in subsection 9(4) and meet with the persons and entities referred to in subparagraph (1)(b)(i) or (ii) for the purpose of assisting them to reach a mutually acceptable arrangement, but shall not provide advice to the farmer or a creditor.

Marginal note:Termination of mediation

• 11 (1) In the case of an application under paragraph 5(1)(a), the mediation terminates

  • (a) when a termination of the stay of proceedings pursuant to subsection 14(2) takes effect pursuant to subsection 14(4); or

  • (b) on a termination of the stay of proceedings by virtue of subsection 14(5).

• Marginal note:Termination of mediation

  (2) In the case of an application under paragraph 5(1)(b),

  • (a) if the administrator is of the opinion, based on information received from the mediator or from any other source, that

    • (i) either the farmer or the majority of the creditors referred to in subparagraph 10(1)(b)(ii)

      • (A) refuse to participate in the mediation, or

      • (B) refuse to continue to participate in good faith in the mediation, or

    • (ii) the mediation will not result in an arrangement between the farmer and the majority of the creditors referred to in subparagraph 10(1)(b)(ii),

    the administrator may direct that the mediation be terminated and, where the administrator so directs, the mediation terminates; and

  • (b) the mediation terminates on the signing of an arrangement under section 19.

• Marginal note:Notice of termination

  (3) Where the mediation terminates pursuant to subsection (1) or (2), the administrator shall so inform the farmer and all the creditors who were eligible to participate in the mediation.

Stay of Proceedings

Marginal note:Effect of stay of proceedings

12 Notwithstanding any other law, during any period in which a stay of proceedings is in effect, no creditor of the farmer

• (a) shall enforce any remedy against the property of the farmer; or

• (b) shall commence or continue any proceedings or any action, execution or other proceedings, judicial or extra-judicial, for the recovery of a debt, the realization of any security or the taking of any property of the farmer.

Marginal note:Extension of stay of proceedings

• 13 (1) Where the administrator considers an extension of the thirty day period referred to in paragraph 7(1)(b) to be essential to the formulation of an arrangement between a farmer and the farmer’s creditors, the administrator may, subject to the regulations, extend that period for a maximum of three further periods of thirty days each.

• Marginal note:Interim extension of stay

  (2) Where

  • (a) there is an appeal under section 15 from a decision of the administrator not to extend a stay of proceedings, and

  • (b) the stay of proceedings expires before the appeal is decided,

  the administrator shall, on that expiration, extend the stay of proceedings until the appeal is decided.

• Marginal note:Notice to creditors

  (3) The administrator shall give notice of any extension granted under subsection (1) or (2) to the farmer and to each creditor listed in the farmer’s application.

• Marginal note:Where appeal successful

  (4) Where, pursuant to an Appeal referred to in paragraph (2)(a), the Appeal Board reverses the administrator’s decision, the resulting thirty day extension of the stay of proceedings starts at the expiration of the original stay of proceedings, or at the expiration of the previous thirty day extension thereof, as the case may be.

Marginal note:Obligatory termination of stay of proceedings

• 14 (1) If the administrator determines, pursuant to paragraph 7(1)(c), that the farmer is not eligible to make the application, the administrator shall direct that the stay of proceedings be terminated.

• Marginal note:Discretionary termination of stay of proceedings

  (2) If the administrator is of the opinion, based on information received from the mediator or from any other source, that

  • (a) either the farmer or the majority of the creditors listed in the application

    • (i) refuse to participate in the mediation, or

    • (ii) refuse to continue to participate in good faith in the mediation,

  • (b) the mediation will not result in an arrangement between the farmer and the majority of the creditors listed in the application,

  • (c) the farmer has contravened any directive issued to the farmer by the administrator pursuant to subsection 17(1), or

  • (d) the farmer has, by any act or omission, jeopardized his or her assets or obstructed the guardian in the performance of the guardian’s duties under subsection 17(2),

  the administrator may direct that the stay of proceedings be terminated.

• Marginal note:Notice of termination

  (3) If the administrator directs that a stay of proceedings be terminated under subsection (1) or (2), the administrator shall inform the farmer, all of the creditors listed in the application and the Minister, if the Minister was given notice of the application by the administrator under subparagraph 7(1)(a)(iii).

• Marginal note:When termination takes effect

  (4) Where the administrator directs, pursuant to subsection (1) or (2), that a stay of proceedings be terminated, the termination takes effect

  • (a) on the expiration of the time prescribed for making an appeal under section 15; or

  • (b) where an appeal is made under section 15, if and when the appeal is dismissed.

• Marginal note:Automatic termination of stay of proceedings

  (5) A stay of proceedings terminates on

  • (a) the signing of an arrangement under section 19; or

  • (b) the farmer’s making an assignment under the Bankruptcy and Insolvency Act.