Farm Debt Mediation Service: Handbook

The FDMS offers free financial counselling and mediation services to farmers who are having difficulties meeting their financial obligations. It is a voluntary, private and confidential service that brings producers and their creditors together with a mediator in a neutral forum to reach a mutually acceptable solution.

A farmer may apply to FDMS, the administrator, under the Farm Debt Meditation Act (FDMA) for either

• Section 5(1)(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,
• Section 5(1)(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. This section normally deals with secured creditors however major unsecured creditors may be included if they are essential to an arrangement.

2. Eligible applicants

You must meet the following 2 criteria to be eligible for mediation services under the Farm Debt Meditation Act .

1. You must be farming for commercial purposes
   • You produce agricultural products for sale and not solely for their purpose and/or
   • you meet the FDMA definition of farming which means:
     1. the production of field-grown crops, cultivated and uncultivated, and horticultural crops
     2. the raising of livestock, poultry and fur-bearing animals
     3. the production of eggs, milk, honey, maple syrup, tobacco, fibre, wood from woodlots and fodder crops
     4. the production or raising of any other prescribed thing or animal
     • You have stopped your payments or are no longer able to make your payments on time
     • If sold, the value of your property would not be enough to cover the cost of your debts

     2.1 Ineligible applicants (2-year rule)

     You are not entitled to make a new application under the same section [5(1)(a) or 5(1)(b)] for the same farming operation for a period of 2 years after an arrangement was signed or after your first application was made where you did not enter into an arrangement.

     The 2-year rule does not apply to new applications for different sections and/or different farming operations.

     3. Application process

     3.1 Decide which application type

     To apply for the FDMS, you must decide which section of the FDMA is most relevant to you.

     If you are unable to determine which of the following section is best-suited to your situation or if you want to discuss your situation, you can contact the FDMS.

     1. Section 5(1)(a)You received a Notice of Intent by Secured Creditor, notice of other recovery action from your creditor(s) or you believe your assets may be in danger of being seized Creditors who send you a Notice of Intent by Secured Creditor under Section 21 of the FDMA must wait 15 business days before they can begin or continue any action to realize on their security. If you received a Notice of Intent by Secured Creditor or notice of other recovery action from your creditor(s) and you have not applied for a mediation under Section 5(1)(a) within the past 2 years, Section 5(1)(a) may be the appropriate application for you. Section 5(1)(a) protects the farm with a stay of proceedings, during which time creditors may not begin or continue recovery or seizure action against your assets, a financial review and mediation. Under section 5(1)(a), the administrator will notify all creditors (secured and unsecured) listed on the application of the request for mediation.
     2. Section 5(1)(b)You have not received a Notice of Intent by Secured Creditor or notice of other recovery action from your creditor(s) If you have not received a Notice of Intent by Secured Creditor or notice of other recovery action, but you can foresee financial difficulties and you have not applied for a mediation under Section 5(1)(b) within the past 2 years, Section 5(1)(b) may be the appropriate application for you. Section 5(1)(b) provides a financial review and mediation without a stay of proceedings. There are no restrictions placed on either you or the creditors. This section normally deals with secured creditors and may include major unsecured creditors essential to an arrangement. Under section 5(1)(b), the administrator will notify only the secured creditor(s) listed on the application of the request for mediation.

     3.2 Complete and submit your application

     Once you decide which section is the most relevant to your situation, complete all 6 parts and the farmer(s) authorization of the application for mediation.

     Your application form must include the signature of the farmer(s) or the authorized officer(s).

     If you have problems opening a PDF form in your Internet browser, you need to:

     • Use your computer. The forms may not open on mobile devices (iPads, tablets, mobile phones).
     • Make sure you have Adobe Reader 11 (or higher) already installed on your computer. If not, download Adobe Reader 11 or higher for free. Adobe has help forsolving common issues.
     • You must save the file on your computer in a place you can remember.
     • Open the file on your computer using Adobe Reader 11 or higher.
     • If you can't open the form with Adobe Reader 11 or higher, contact the program.

     How to download and open a PDF form

     • Microsoft Windows Operating System computers using "Internet Explorer" or "Microsoft Edge" as your browser
       1. Right-click on the link you want to save
       2. Select "Save target as" or "Save link as"
       3. Choose the location on your computer where you would like to save the file
       4. Select "Save"
       5. Open Adobe Reader 11 or higher
       6. Select "File"
       7. Select "Open"
       8. Go to the location where you saved the file
       9. Select the PDF file
       10. Select "Open"
     • Microsoft Windows Operating System or Apple computers using "Chrome" or Firefox" as your browser
       1. Right-click on the link you want to save
       2. When the option menu appears, choose "Download link file" or "Download link file as"
       3. Choose the location on your computer where you would like to save the file. Your computer will start the download once you have selected a location.
       4. Open Adobe Reader 11 or higher
       5. Go to the location where you saved the file
       6. Select the PDF file
       7. Select "Open"

     4. After you apply

     After you submit your application form, the administrator will notify you if your application has been accepted or rejected. If your application is accepted, the administrator will confirm which section [Section 5(1)a or Section 5(1)b] of the FDMA you are eligible for and answer any questions you may have about the process.

     4.1 Acceptance under Section 5(1)(a) Mediation with a stay of proceedings

     If you are eligible for Mediation with a stay of proceedings, the administrator will give notice of the application to each creditor (secured and unsecured) listed in your application, issue a stay of proceedings and appoint a guardian of your assets.

     4.1.1 Stay of proceedings (Acceptance under Section 5(1)(a))

     If you are eligible for a stay of proceedings, the FDMS will grant an initial stay of proceedings for a period of 30 days for applications under 5(1)(a). Creditors may not begin or continue recovery or seizure action against assets during the period of the stay of proceedings. The stay may be extended in 30-day increments to a maximum of 120 calendar days when it is deemed essential to the formulation of an arrangement between the farmer and the farmer's creditors.

     During the stay of proceedings, you must follow the guardian directives, and you cannot:

     • incur additional debt
     • sell or transfer assets without prior written permission

     4.1.2 Guardian directives (Acceptance under Section 5(1)(a))

     Under the guardian directives, the administrator will appoint a guardian when a stay of proceedings is issued [Section 5(1)(a)]. The guardian is required to prepare an inventory of all assets, verify periodically the presence and condition of the assets, and advise the administrator of any act or omission that would jeopardize the assets.

     The guardian commits to:

     1. carry on the farm and/or business enterprise in the best interest of that enterprise, keep proper financial records and written records and supporting documents for the business.
     2. not sell, dispose or transfer any secured property, nor use money thus obtained, without the prior written approval of relevant secured creditor(s). A copy of the written approval must be provided to the administrator.
     3. continue to pay essential farm operating expenses such as heat, power, family living expenses, feed, loans, invoices, if funds are available.
     4. not incur additional debts that could be detrimental to reaching an arrangement with creditors.
     5. if necessary, develop and review a budget of planned income and expenses with the main creditor(s) to avoid any conflict relating to payments of expenses during the stay period. The administrator office may assist in this regard.
     6. in the case of corporations, the corporation may not pay bonuses or dividends to employers, officers, or shareholders during the stay of proceedings.
     7. maintain throughout the stay of proceedings all assets insurance that was in place at the time the stay was issued for such amount and against such hazards as would be prudent in the normal course of business.
     8. complete and submit the "Guardian report to the administrator" as requested by the administrator before any extensions to the stay of proceedings can be granted.

     The stay of proceedings will be terminated if any directive issued by the administrator as outlined in the guardian directives are contravened.

     4.2 Acceptance under Section 5(1)(b) — Mediation only

     The administrator will give notice of the application to each secured creditor. This section only includes a financial review and mediation, it does not include a stay of proceedings.

     4.3 Financial review and mediation [Section 5(1)(a) and Section 5(1)(b)]

     The administrator will assign a financial consultant and a mediator to work with you through the mediation process.

     The financial consultant will prepare a report which includes:

     1. an inventory of all your assets
     2. financial statements of your farming operation
     3. a recovery plan for the purpose of reaching a financial arrangement between you and your creditor(s) (optional)

     The mediator is responsible to ensure a fair and unbiased mediation process and to remain neutral throughout all discussions. Confidentiality is extremely important to the quality and effectiveness of the service. Information obtained from you and your creditor(s) is used for the sole purpose of mediation and is shared only among the parties involved in the mediation process.

     The mediator has no decision-making power and is at the meeting only to help you and your creditor(s) reach your own mutually acceptable settlement. The mediator will lead a discussion encouraging both you and your creditor(s) to:

     • participate
     • communicate effectively
     • explore and clarify options for settlement

     When you and your creditor(s) agree upon a solution, the mediator will draw-up an arrangement.

     If you and your creditor(s) do not reach an arrangement at the meeting, FDMS will terminate the mediation process and end the stay of proceedings.

     4.4 Arrangement

     The signature of the arrangement completes FDMS's involvement in the mediation process and terminates the stay of proceedings (if applicable). The Notice of Termination of mediation will be sent to you and your creditor(s).

     It is your responsibility to implement the arrangement. The 2-year rule applies to the agreement.

     5. Termination of stay of proceedings

     The stay of proceedings will be terminated under the following circumstances:

     1. You sign an arrangement
     2. You withdraw your application
     3. You make an assignment under the Bankruptcy and Insolvency Act .
     4. You or the majority of the creditors listed in the application
        1. refuse to participate in the mediation, or
        2. refuse to continue to participate in good faith in the mediation.

        6. Appeal a decision

        You or your creditor(s) have the right to appeal a decision made by the administrator on 5(1)a applications only in relation to:

        • the eligibility of a farmer to make the application
        • the extension or termination of a stay of proceedings

        To submit an appeal, contact the FDMS to request an appeal form.

        The administrator will notify all implicated parties of the appeal within 1 business day of receipt of the completed appeal form. Implicated parties have the right to object or rebut the appeal. Objections and rebuttals must be submitted within 3 business days of the appeal submission notification. The appellant may provide a written response to the objection and rebuttal within 1 business day. The appeal form must be submitted to the administrator by the deadline included on the FDMS notice. Appeals submitted after the deadline will not be considered.

        The stay of proceedings will remain in place and will not be affected by the making of an appeal.

        The FDMS Appeal Board will review the appeal and render a decision expeditiously. Appeal decisions are final.

        7. Amend an application

        You may request permission to amend your application to be an application under the alternate section. Requests for amendments can be submitted at any time before the termination of the mediation. Amendment requests are reviewed by the administrator on a case-by-case basis.

        8. Withdraw an application

        You may withdraw your application for mediation at any time during the mediation process. Requests to withdraw must be submitted to the administrator in writing.

        9. Creditor roles and responsibility

        Secured creditors are required to serve you with a Notice of Intent by Secured Creditor before taking legal action to recover debts as per Section 21 of the FDMA. The notice must advise you of the right to make an application for mediation (PDF). Secured creditors must wait 15 business days after the Notice of Intent by Secured Creditor is deemed served before starting or continuing collection action. You may apply to the FDMS during this period, or at any time afterwards.

        If you apply to the FDMS and a stay of proceedings is issued, creditors may not recover debts during this period. The administrator will notify all creditors of your application for mediation, appointment of a guardian and you will be invited to participate in the mediation process.

        Participation of creditors in the mediation process is voluntary.

        Creditors have the right to appeal the decision of the administrator on your eligibility to make an application or the extension/termination of the stay of proceedings.

        The FDMS process is confidential. As such, creditors are not permitted to communicate to others that you have made an application to the FDMS. Refer to Section 21(1) and Section 24(2) of the FDMA for more information.

        10. Contact us

        Regional offices

        For more information, or to submit your application, contact the regional office nearest to you.

        Regional Office responsible for Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Saskatchewan and Yukon

        Agriculture and Agri-Food Canada
        Farm Debt Mediation Service
        301-2010 12th Avenue
        Regina SK S4P 0M3

        Toll free number: 1-866-452-5556
        Fax: 1-833-902-8388

        Regional Office responsible for New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, and Quebec

        Agriculture and Agri-Food Canada
        Farm Debt Mediation Service
        2560 Hochelaga Boulevard
        Quebec QC G1V 2J3

        Toll free number: 1-866-452-5556
        Fax: 1-833-902-8388

        11. Disclaimers

        The FDMS, its services, representatives and documents do not, and are not intended to, constitute legal advice. If need be, farmers and creditors are advised to seek legal advice from their legal counsel.

        The FDMS is legislated under the FDMA and its regulations. Should there be any differences between this handbook and the legislation, the legislation supersedes the handbook.

        Annex A: How to complete the application form

        Part 1: Eligibility requirements

        To be eligible for the FDMS, you must farm commercially and meet at least 1 of the following 2 criteria:

        • You have stopped or are no longer able to make your payments on time
        • If sold, the value of your property would not be enough to cover the cost of your debts

        Part 2: Applicant information

        It is important that you provide both the farm legal name (if applicable) and the name recognizable to your creditors. The information in this section will be used to identify the farm in our communications with your creditors.

        Part 3: Farm owners and primary contact

        The farm representative(s), unless otherwise approved by FDMS Administrator, is/are the farm owners and must:

        • be duly authorized to make decisions on behalf of the farm
        • provide the required information to the financial expert
        • attend the mediation meeting
        • have the authority to sign the arrangement if an arrangement is reached at the mediation meeting

        As the farm owner(s), the authorized representative(s) must also sign the Farmer(s) Authorization page of this application.

        Farm debt mediation documents and notices will be shared with the farm representative(s) by email as a first method of communication unless the farmer doesn't have access to email.

        Part 4: Application type

        Indicate which section you are applying for. See 3.1 Decide which application type for information on Section 5(1)(a) and Section 5(1)(b)

        1. Section 5(1)(a) Application for Stay of proceedings, review of financial affairs and mediation
        2. Section 5(1)(b) Application for review of financial affairs and mediation

        Part 5: Creditor information

        Section 5(1)(a) Application for Stay of proceedings, review of financial affairs and mediation

        List all secured and unsecured creditors to complete section 2–Secured creditors and section 3 –Unsecured creditors. Ensure creditor contact information is complete. Incomplete applications may be returned which may cause a delay in processing your application.

        A secured creditor is a creditor who holds some or all of your assets, including money owed to you, as a security for his/her loan to you and such asset/property may be seized if you default in repayment of your loan. Include all outstanding balances on Advance Payment Program (APP) advances in this section. Go to APP/ FDMS Advanced Payments Program/Farm Debt Mediation Service information page for additional information.

        An unsecured creditor is a creditor who does not hold any of your assets as security for payment for his/her loan and has no other recourse but to sue you in order to have the loan paid. Include all unsecured creditors with an estimated balance of $1,000 or more.

        Section 5(1)(b) Application for review of financial affairs and mediation

        List all secured creditors. Only include major unsecured creditors that would be necessary to a viable arrangement. Ensure creditor contact information is complete. Incomplete applications will be returned and may cause a delay.

        Part 6: Summary of assets

        List an estimated value of all assets such as cash on hand, accounts receivable, farm supplies, marketable securities, livestock, quota, grain, produce, forage, land, farm equipment, buildings, improvements, etc.

        An in-depth analysis of asset values will be conducted by the financial expert during the mediation process.

        Farmer authorization

        The application form must include the signature of the farmer(s) or the authorized officer(s). Incomplete or unsigned application forms will be returned for completion and may result in a delay.

        If you have any questions about the form, please contact the FDMS.