Farm Debt Mediation Service: Step 6. After you apply

Step 6. After you apply

1. We'll send you an acknowledgement notice

After you submit your application, an acknowledgement notice will be sent to you.

You should not consider your application to be submitted to the service until you receive the acknowledgment notice.

2. We'll assess your application

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 [5(1)(a) or 5(1)(b)] you're eligible for and answer any questions you may have about the process.

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

If you're 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.

Stay of proceedings

If you're eligible for a stay of proceedings, the Farm Debt Mediation Service (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

Guardian directives

Under the guardian directives, the administrator will appoint a guardian when a stay of proceedings is issued. The guardian must 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 and keep proper financial records, 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, and 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.

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.

3. We'll assign a qualified financial consultant and mediator

A qualified financial consultant will be assigned to work with you throughout the mediation process. The consultant will visit your farm to learn how your operation works. The consultant will work with you to:

• assess your current financial situation
• explore options and develop a plan for the future
• collect financial information to prepare a financial statement and recovery plan
• complete projections to evaluate the viability of the plan
• contact creditors to verify amounts owed
• attend the mediation meeting and assist you with negotiations

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)

The mediator is responsible for ensuring a fair and unbiased mediation process and remaining 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) don't reach an arrangement at the meeting, the FDMS will terminate the mediation process and end the stay of proceedings.

4. You sign an arrangement

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

It's your responsibility to carry out the arrangement. The 2-year rule applies to the arrangement.

Termination of stay of proceedings

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

• You sign an arrangement
• You withdraw your application
• You make an assignment under the Bankruptcy and Insolvency Act.
• You or the majority of the creditors listed in the application
  • refuse to participate in the mediation, or
  • refuse to continue to participate in good faith in the mediation
• The mediation won't result in an arrangement between you and the majority of the creditors listed in the application
• You have contravened any directive issued to you by the administrator, as outlined in the guardian directives
• You have, by any act or omission, jeopardized your assets or obstructed the guardian in the performance of the guardian's duties

You may 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 won't be considered.

If you submit an appeal, the stay of proceedings will remain in place until the FDMS Appeal Board reviews the appeal and quickly delivers a decision. Appeal decisions are final.

You may 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.

You may 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.

Service standards

Our service's goal is to:

• respond to general inquiries made by phone or email before the end of the next business day
• notify you if your application has been accepted or not by the end of the next business day
• have all necessary documentation sent to you and the creditor(s) 7 business days prior to the mediation meeting
• schedule the first mediation meeting within 70 calendar days after acceptance of your application