Farm Debt Mediation Service

The May 2005 FDMS Report to Parliament
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Summary

The Farm Debt Review Boards (FDRB), were established in 1986 under the Farm Debt Review Act (FDRA), which was repealed on April 1, 1998 upon implementation of the Farm Debt Mediation Act (FDMA). The FDMA is managed through the Farm Debt Mediation Service (FDMS) offices.

The Farm Debt Mediation Service provides insolvent farmers and their creditors with mediation services pursuant to the federal Farm Debt Mediation Act (FDMA) and Regulations to help them arrive at a mutually satisfactory arrangement. The service is a private, confidential and economical alternative to the often costly, public and drawn-out process of resolving insolvency disputes in the courts. Where this is not successful, the parties still have recourse to the courts. Under the former Farm Debt Review Act, over 70 per cent of cases were successfully resolved using the mediation approach.

Program Description

Under the FDMA, farmers can apply for either of two application processes:

• Stay of Proceedings, Review and Mediation (Paragraph 5(1)(a)), or
• Review and Mediation without a Stay (Paragraph 5(1)(b)).

There are several factors to consider in deciding how to apply.

Secured creditors are required by the Act to serve the farmer with a Notice of Intent to Realize on Security before undertaking any action to recover debts. In this case, the farmer would usually choose to apply for the Stay of Proceedings to prevent further action by the creditor during mediation. The farmer would also apply for a Stay when being sued for a debt by an unsecured creditor. Though unsecured creditors are not required to provide the Notice, the Stay still protects the farmer's assets during mediation. If a Notice hasn't been served and legal action hasn't been taken, the farmer may prefer to apply for review and mediation only, without applying for a Stay.

Once the administrator confirms eligibility, a financial expert is assigned to conduct a detailed review of the farmer's financial affairs. The expert may also help the farmer prepare a recovery plan outlining what the farmer proposes to do to resolve their financial difficulty. The expert then assists the farmer in making projections to evaluate the feasibility of the plan.

Alternatively, the recovery plan may be prepared by a financial expert/consultant requested by the farmer. If the recommend expert is qualified, the administrator will contract with them, for up to a prescribed limit, for the cost of preparing the recovery plan. The contractor will be subject to the terms and conditions of the contract with the FDMS.

Next, the administrator appoints a mediator to meet with the farmer and his or her creditors. If the farmer has applied for a Stay, the meeting would include all creditors. In applications without a Stay the meeting includes all secured creditors and any other creditors who need to be involved in reaching a settlement. With the assistance of the mediator, the farmer and creditors discuss and possibly amend the recovery plan. In most cases, as experience shows, they reach a settlement that is helpful to all.

Who is eligible?

Those eligible for debt mediation include insolvent individuals, corporations, partnerships, co-operatives or other associations of persons "engaged in farming for commercial purposes." To be eligible, an insolvent farmer must be producing crops, livestock or other eligible commodities intended for commercial sale rather than for the personal use of the applicant. To be considered insolvent, applicants must meet one of the following criteria:

• unable to meet their obligations as they generally come due,
• ceased paying their current obligations in the ordinary course of business as they generally become due, or
• the value of their property, 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.

How to obtain services?

PRIMARY CONTACT:

British Columbia, Alberta, Yukon Territory and Northwest Territories
Canadian Agri-Renewal Services
Agriculture and Agri-Food Canada
Suite 810
10123-99 Street
Edmonton AB T5J 3H1
Tel: (780) 495-3212 / 1 866 452-5558
Fax: (780) 495-3971

Saskatchewan, Manitoba
Canadian Agri-Renewal Services
Agriculture and Agri-Food Canada
1800 Hamilton Street, Room 401
Regina, SK S4P 4K7
Tel: (306) 780-5594 / 1 866 452-5558
Fax: (306) 780-7353

Ontario and Nunavut
Canadian Agri-Renewal Services
Agriculture and Agri-Food Canada
174 Stone Road West
Guelph , ON N1G 4T1
Tel: (519) 763-8135 / 1 866 452-5558
Fax: (519) 836-3213

Quebec
Canadian Agri-Renewal Services
Agriculture and Agri-Food Canada
Gare Maritime Champlain
901 Cap Diamant Street, Suite 350-4
Quebec QC G1K 4K1
Tel.: (418) 648-4775 / 1 866 452-5558
Fax: (418) 648-2439

New Brunswick, Prince Edward Island, Nova Scotia and Newfoundland and Labrador
Canadian Agri-Renewal Services
Agriculture and Agri-Food Canada
P.O. Box 57000
Research Centre, 850 Lincoln Road
Fredericton, NB E3B 6C2
Tel.: (506) 452-4098 / 1 866 452-5558
Fax: (506) 452-4975

Farm Debt Mediation Service Forms

• Notice of Intent to Realize on Security (NOI)

Note to creditors: Please fax or mail the administrator's copy of the Notice of Intent to Realize on Security to the appropriate regional office. The contact information can be found above.