Farm Debt Mediation Act

An Act to provide for mediation between insolvent farmers and their creditors, to amend the Agriculture and Agri-Food Administrative Monetary Penalties Act and to repeal the Farm Debt Review Act Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows: Short title This Act may be cited as the Farm Debt Mediation Act. Definitions The definitions in this section apply in this Act. 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 means the production of field-grown crops, cultivated and uncultivated, and horticultural crops; the raising of livestock, poultry and fur-bearing animals; the production of eggs, milk, honey, maple syrup, tobacco, fibre, wood from woodlots and fodder crops; and the production or raising of any other prescribed thing or animal. (exploitation d’une entreprise agricole) Minister means the Minister of Agriculture and Agri-Food. (ministre) prescribed means prescribed by regulation. secured creditor means 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; any person, cooperative, partnership or other association of persons 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 to which such an agreement or contract has been assigned; and 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) Binding on Her Majesty This Act is binding on Her Majesty in right of Canada or a province. Appointment Subject to subsection (2), administrators shall be appointed for the purposes of this Act in accordance with the Public Service Employment Act. Designation 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. Agreements 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). Mediators, experts An administrator may enter into agreements for the services of mediators, subject to the regulations, and 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. Application to administrator Subject to section 6, a farmer may apply to an administrator for either 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 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. Names of creditors An application under subsection (1) must include the names and addresses of all the farmer’s creditors. Farmer must be insolvent Only farmers who are for any reason unable to meet their obligations as they generally become due, who have ceased paying their current obligations in the ordinary course of business as they generally become due, or 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. Administrator’s duties on receiving application On receipt of a duly completed application under section 5, the administrator shall forthwith give notice of the application to each creditor listed in the application, in the case of an application made under paragraph 5(1)(a), each secured creditor listed in the application, in the case of an application made under paragraph 5(1)(b), and 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; 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 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. Certain decisions final 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. Amendment of application 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. Two year period 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 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. Nature of review The review mentioned in subsection (1) must include the preparation of an inventory of all the assets of the farmer, and financial statements of the farmer’s farming operation; 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 may include the preparation of recovery plans for the purpose of reaching financial arrangements with creditors and the Minister. Preparation of recovery plans 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. Report The results of a review under this section must take the form of a report prepared by or on behalf of the administrator. Appointment of mediator Forthwith after the report mentioned in subsection 9(4) has been prepared, the administrator shall 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; inform 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 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 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. Duties of mediator 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. Termination of mediation In the case of an application under paragraph 5(1)(a), the mediation terminates when a termination of the stay of proceedings pursuant to subsection 14(2) takes effect pursuant to subsection 14(4); or on a termination of the stay of proceedings by virtue of subsection 14(5). In the case of an application under paragraph 5(1)(b), if the administrator is of the opinion, based on information received from the mediator or from any other source, that either the farmer or the majority of the creditors referred to in subparagraph 10(1)(b)(ii) refuse to participate in the mediation, or refuse to continue to participate in good faith in the mediation, or 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 the mediation terminates on the signing of an arrangement under section 19. Notice of termination 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. Effect of stay of proceedings Notwithstanding any other law, during any period in which a stay of proceedings is in effect, no creditor of the farmer shall enforce any remedy against the property of the farmer; or 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. Extension of stay of proceedings 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. Interim extension of stay Where there is an appeal under section 15 from a decision of the administrator not to extend a stay of proceedings, and 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. Notice to creditors 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. Where appeal successful 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. Obligatory termination of stay of proceedings 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. Discretionary termination of stay of proceedings If the administrator is of the opinion, based on information received from the mediator or from any other source, that either the farmer or the majority of the creditors listed in the application refuse to continue to participate in good faith in the mediation, the mediation will not result in an arrangement between the farmer and the majority of the creditors listed in the application, the farmer has contravened any directive issued to the farmer by the administrator pursuant to subsection 17(1), or 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. 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). When termination takes effect Where the administrator directs, pursuant to subsection (1) or (2), that a stay of proceedings be terminated, the termination takes effect on the expiration of the time prescribed for making an appeal under section 15; or where an appeal is made under section 15, if and when the appeal is dismissed. Automatic termination of stay of proceedings A stay of proceedings terminates on the signing of an arrangement under section 19; or the farmer’s making an assignment under the Bankruptcy and Insolvency Act. Appeal Boards The Minister may, in accordance with the regulations, constitute one or more Appeal Boards and designate the members thereof, and may enter into agreements for the services of the members, which agreements may include provision for remuneration and travel and living expenses. Appeals A farmer or a creditor may, in accordance with the regulations, appeal to an Appeal Board a decision of an administrator relating to the eligibility of a farmer to make the application under paragraph 5(1)(a); or the extension or termination of a stay of proceedings. Regulations The Appeal Board shall deal with an appeal in accordance with the regulations. Stay not affected The making of an appeal does not affect a stay of proceedings that is in effect. Board’s decision final A decision of an Appeal Board is final and is not subject to appeal. Administrator to appoint guardian Where the administrator issues a stay of proceedings under paragraph 7(1)(b), the administrator shall forthwith appoint one of the following persons as guardian of the farmer’s assets: the farmer, where the farmer is qualified to be the guardian; or in any other case, any other qualified person nominated by any secured creditor or secured creditors listed in the application, or any other qualified person chosen by the administrator. Informing farmer and creditors The administrator shall forthwith inform the farmer, and all the creditors listed in the application, of the appointment of the guardian. Expenses of guardian Where the administrator appoints a person referred to in subparagraph (1)(b)(i) as guardian, the expenses of the guardian shall be paid by the secured creditor or secured creditors who nominated that person. Where the administrator appoints a person referred to in subparagraph (1)(b)(ii) as guardian, the expenses of the guardian shall be paid by the administrator. Duties of guardian The administrator may issue directives to the guardian, and the guardian shall comply with any such directives. The guardian shall, in addition to the obligation under subsection (1), prepare an inventory of all the assets of the farmer; verify periodically the presence and condition of those assets; and advise the administrator of any act or omission that would jeopardize those assets. Termination of guardianship The appointment of a guardian under section 16 terminates on the expiration or termination of the stay of proceedings. Arrangement If a farmer enters into an arrangement with a creditor, or with the Minister, as a result of the mediation, the administrator shall see to its signing by the parties. New applications under paragraph 5(1)(a) Notwithstanding any other provision of this Act, where a farmer makes an application under paragraph 5(1)(a), that farmer, or any person who is related to that farmer within the meaning of the regulations, is not entitled to make a new application under that paragraph in respect of substantially the same farming operation for a period of two years after the date on which the first application was made, where the farmer did not enter into an arrangement with the creditors during the stay of proceedings, or the date on which the arrangement was signed, where the farmer entered into an arrangement with the creditors, unless, before making the new application, the person seeking to apply obtains the written consent of the administrator. New applications under paragraph 5(1)(b) Notwithstanding any other provision of this Act, where a farmer makes an application under paragraph 5(1)(b), that farmer, or any person who is related to that farmer within the meaning of the regulations, is not entitled to make a new application under that paragraph in respect of substantially the same farming operation for a period of two years after the date on which the first application was made, where the farmer did not enter into an arrangement with the creditors within the period prescribed for the mediation, or Notice by secured creditors Every secured creditor who intends to enforce any remedy against the property of a farmer, or commence 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 a farmer shall give the farmer written notice of the creditor’s intention to do so, and in the notice shall advise the farmer of the right to make an application under section 5. Time of notice The notice must be given to the farmer and to an administrator, in the form established by the Minister and in accordance with the regulations, at least 15 business days before the doing of any act described in paragraph (1)(a) or (b). Contravention by creditor Subject to subsection (2), any act done by a creditor in contravention of section 12 or 21 is null and void, and a farmer affected by such an act may seek appropriate remedies against the creditor in a court of competent jurisdiction. Innocent parties protected Subsection (1) does not affect the title to property of a person who purchased the property in good faith from the creditor and who was not then related to the creditor within the meaning of the regulations; and does not confer on the farmer any remedy against a person described in paragraph (a). Disputes Nothing in this Act prevents any party to an arrangement made under this Act from taking a dispute arising therefrom to a court of competent jurisdiction for disposition. Communication of information Except as authorized by subsection (2), no person shall knowingly communicate or knowingly allow to be communicated to any person any information that is obtained under this Act from a farmer, from a farmer’s creditor or from the Minister or knowingly allow any person to inspect or have access to that information. Exception A person engaged in the administration of this Act, or a mediator or expert referred to in subsection 4(4), may communicate or allow to be communicated, or allow inspection of or access to, the information referred to in subsection (1) to or by any other person engaged in the administration of this Act or any person otherwise legally entitled to the information. Protection of witness A person engaged in the administration of this Act, or a mediator or expert referred to in subsection 4(4), is not compellable to answer questions concerning the information, or to produce records or other documents containing the information, as evidence in any proceedings not directly concerned with the enforcement or interpretation of this Act or the regulations. Personal liability A person engaged in the administration of this Act, or a mediator or expert referred to in subsection 4(4), is not personally liable for anything done or omitted to be done in good faith in the performance of their duties under this Act. The Minister may make regulations respecting the designation of persons as administrators pursuant to subsection 4(2); for permitting a farmer or creditor to request the administrator to replace the mediator or guardian with a different mediator or guardian; respecting the entering into of agreements under subsection 9(3); respecting the qualifications and appointment of mediators, and respecting the manner in which and the period within which mediators must perform their duties under subsection 10(2); respecting the time by which an administrator must decide whether or not to extend a stay of proceedings pursuant to subsection 13(1); respecting the number and constitution of Appeal Boards, the designation of the members thereof, and the manner in which and the period within which appeals under subsection 15(2) shall be made and dealt with; respecting the meaning of “related” for the purposes of section 20 and for the purposes of subsection 22(2); prescribing anything that by this Act is to be prescribed; and generally for carrying out the purposes and provisions of this Act. Forms and their content The Minister may establish forms and other documents for carrying out the purposes and provisions of this Act and may determine the information to be included in such documents, and, without limiting the generality of the foregoing, may determine the manner of amending an application; and providing information or notices required by this Act. Offence Any person who contravenes a provision of this Act or the regulations is guilty of an offence and liable on summary conviction to a fine not exceeding fifty thousand dollars or to a term of imprisonment not exceeding six months, or to both. Review of Act Every five years after the coming into force of this subsection, the Minister shall undertake a review of the operation of this Act and may for that purpose consult with representatives of any organizations that the Minister considers appropriate. Review by Minister In conducting the review under subsection (1), the Minister shall review the operation of any program or service that is created after this section comes into force for the purpose of undertaking a detailed review of the financial affairs of a farmer in financial difficulty, at the farmer’s request. Report to Parliament As soon as possible after completing the review referred to in subsection (1), the Minister shall cause a report of the results of the review to be laid before each House of Parliament. [Amendments] [Repeal] In sections 33 to 35, old Act means the Farm Debt Review Act; and new Act means the Farm Debt Mediation Act. Applications made under Farm Debt Review Act For the purposes of section 44 of the Interpretation Act, an application made under section 16 of the old Act shall be dealt with as if it had been made under paragraph 5(1)(b) of the new Act, regardless of whether the farmer in question would be eligible to apply under paragraph 5(1)(b) of the new Act, but section 8 of the new Act does not apply unless the farmer in fact meets the requirement of section 6 of the new Act; and an application made under section 20 of the old Act shall be dealt with as if it had been made under paragraph 5(1)(a) of the new Act, regardless of whether the farmer in question would be eligible to apply under paragraph 5(1)(a) of the new Act. Two year rule Subsection 20(1) of the new Act applies, with such modifications as the circumstances require, in respect of farmers whose previous application was under section 20 of the old Act. Subsection 20(2) of the new Act does not apply in respect of farmers whose previous application was under section 16 of the old Act. Members of Farm Debt Review Boards Chairmen and other members of the Farm Debt Review Boards who hold office under section 4 of the old Act cease to hold office on the coming into force of the new Act. Coming into force This Act comes into force on a day to be fixed by order of the Governor in Council. [Note: Act in force April 1, 1998, see SI/98-52.]