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Bill C-38

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2nd Session, 35th Parliament,
45 Elizabeth II, 1996-97

The House of Commons of Canada

BILL C-38

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

Short title

1. This Act may be cited as the Farm Debt Mediation Act.

INTERPRETATION

Definitions

2. The definitions in this section apply in this Act.

``farmer''
« agriculteur »

``farmer'' means any individual, corporation, cooperative, partnership or other associa tion of persons that is engaged in farming for commercial purposes and that meets any prescribed criteria.

``farming''
« exploita-
tion d'une entreprise agricole »

``farming'' means

      (a) the production of field-grown crops, cultivated and uncultivated, and horticul tural crops;

      (b) the raising of livestock, poultry and fur-bearing animals;

      (c) the production of eggs, milk, honey, maple syrup, tobacco, fibre, wood from woodlots and fodder crops; and

      (d) the production or raising of any other prescribed thing or animal.

``Minister''
« ministre »

``Minister'' means the Minister of Agriculture and Agri-Food.

``prescribed'' Version anglaise seulement

``prescribed'' means prescribed by regulation.

``secured creditor''
« créancier garanti »

``secured creditor'' means

      (a) 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;

      (b) any individual, corporation, coopera tive, partnership or other association of persons with which a farmer has entered into an agreement for sale or hire-pur chase or, in the Province of Quebec, leasing, or a conditional sales contract, relating to any property used or occupied by the farmer or to which such an agreement or contract has been assigned; and

      (c) any bank to which security on the property of a farmer or any part thereof has been given under section 427 of the Bank Act.

HER MAJESTY

Binding on Her Majesty

3. This Act is binding on Her Majesty in right of Canada or a province.

ADMINISTRATORS

Appointment

4. (1) Subject to subsection (2), administra tors shall be appointed for the purposes of this Act in accordance with the Public Service Employment Act.

Designation

(2) The Minister may, in accordance with the regulations, if any, and on such terms and conditions as the Minister may specify, desig nate 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

(3) For the purposes of this Act, the Minister may enter into an agreement with any individ ual or body in relation to the remuneration and travel and living expenses of administrators designated under subsection (2).

Mediators, experts

(4) An administrator may enter into agree ments

    (a) for the services of mediators, subject to the regulations, and

    (b) for the services of experts

relating to applications made under section 5, and such agreements may include provision for remuneration and travel and living ex penses.

APPLICATIONS

Application to administrator

5. (1) Subject to section 6, a farmer may apply to an administrator for either

    (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 arrange ment; or

    (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 mutual ly acceptable arrangement.

Names of creditors

(2) An application under subsection (1) must include the names and addresses of all the farmer's creditors.

Farmer must be insolvent

6. Only farmers

    (a) who are for any reason unable to meet their obligations as they generally become due,

    (b) who have ceased paying their current obligations in the ordinary course of busi ness as they generally become due, or

    (c) 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.

Administra-
tor's duties on receiving application

7. (1) On receipt of a duly completed application under section 5, the administrator shall forthwith

    (a) give notice of the application to

      (i) each person whose name is listed as a creditor in the application, in the case of an application under paragraph 5(1)(a), or

      (ii) each person whose name is listed as a secured creditor in the application, in the case of an application under para graph 5(1)(b);

    (b) in the case of an application under paragraph 5(1)(a), issue a thirty day stay of proceedings against the farmer by all the farmer's creditors, and give notice thereof to each person whose name is listed as a creditor in the application; and

    (c) 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

(2) 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

8. (1) 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

(2) 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

Financial review

9. (1) 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

(2) The review mentioned in subsection (1)

    (a) must include the preparation of

      (i) an inventory of all the assets of the farmer, and

      (ii) financial statements of the farmer's farming operation;

    (b) may, in the case of an application under paragraph 5(1)(b), include a recommenda tion, notwithstanding that paragraph, that one or more creditors who are not secured creditors participate in the mediation; and

    (c) may include the preparation of recovery plans for the purpose of reaching financial arrangements with creditors.

Preparation of recovery plans

(3) Where a farmer requests the administra tor 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

(4) The results of a review under this section must take the form of a report prepared by or on behalf of the administrator.

MEDIATION

Appointment of mediator

10. (1) Forthwith after the report mentioned in subsection 9(4) has been prepared, the administrator shall

    (a) 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 ques tion;

    (b) inform

      (i) the farmer and all the creditors listed in the application, in the case of an application made under paragraph 5(1)(a), or

      (ii) in the case of an application made under paragraph 5(1)(b), the farmer, all the secured creditors listed in the applica tion, and any creditors mentioned in a recommendation under paragraph 9(2)(b),

    as the case may be, of the appointment of the mediator; and

    (c) provide a copy of the report mentioned in subsection 9(4) to the mediator and to the persons who will be participating in the mediation.

Duties of mediator

(2) In accordance with the regulations, the mediator shall examine the report mentioned in subsection 9(4) and meet with the persons referred to in subparagraph (1)(b)(i) or (ii), as the case may be, for the purpose of assisting them to reach a mutually acceptable arrange ment, but shall not provide advice to the farmer or a creditor.

Termination of mediation

11. (1) In the case of an application under paragraph 5(1)(a), the mediation terminates

    (a) when a termination of the stay of proceedings pursuant to subsection 14(2) takes effect pursuant to subsection 14(4); or

    (b) on a termination of the stay of proceed ings by virtue of subsection 14(5).

Termination of mediation

(2) In the case of an application under paragraph 5(1)(b),

    (a) if the administrator is of the opinion, based on information received from the mediator or from any other source, that

      (i) either the farmer or the majority of the creditors referred to in subparagraph 10(1)(b)(ii)

        (A) refuse to participate in the medi ation, or

        (B) refuse to continue to participate in good faith in the mediation, or

      (ii) 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 medi ation be terminated and, where the adminis trator so directs, the mediation terminates; and

    (b) the mediation terminates on the signing of an arrangement under section 19.

Notice of termination

(3) Where the mediation terminates pur suant to subsection (1) or (2), the administra tor shall so inform the farmer and all the creditors who were eligible to participate in the mediation.

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