Directives to a guardian appointed under the Farm Debt Mediation Act

This document outlines the responsibilities of the guardian of the assets when they are appointed under the Farm Debt Mediation Act (FDMA). This document is shared with the farmer, guardian and creditors to make sure all parties understand the role and responsibilities of the guardian and of the farmer during the stay of proceedings. The name of the guardian can be found on the "Notice of stay of proceedings and appointment of guardian" issued by the administrator.

Compliance with the FDMA and with the guardian directives will help decide whether the stay of proceedings, now in place, may be extended or terminated.

Duties of the guardian

Under subsection 17(2) of the FDMA, the guardian of the assets must

• prepare an inventory of all the assets of the farmer;
• verify periodically the presence and condition of those assets; and
• tell the administrator of any act or omission that would jeopardize those assets.

Directives to the guardian

Under subsections 17(1) and 17(2) of the FDMA, the administrator gives the following directives to the guardian who must:

1. carry on the farm and/or business enterprise in the best interest of that enterprise, keep proper financial 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. if funds are available, may continue to pay essential farm operating expenses such as heat, power, family living expenses, feed, loans, and invoices.
4. not incur additional debts that could be detrimental to reaching an arrangement with creditors.
5. if necessary, develop a budget of planned income and expenses during the stay of proceedings and review the budget with the main creditor(s) to avoid any conflict about payments of expenses during the stay period. The Farm Debt Mediation Service (FDMS) office may help with this.
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 when the stay was issued for such amount and against such hazards as would be prudent in the normal course of business. If you can't afford insurance on a secured asset/loan, you are encouraged to inform the relevant creditor(s)as soon as possible.
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.