Directives to a Farmer Appointed as Guardian

The following directives are in effect as of the date indicated on the Stay of Proceedings. They are given pursuant to the farmer’s appointment as Guardian of his or her assets under Section 16 and 17 of the Farm Debt Mediation Act (FDMA).  To effectively guard assets the farmer must follow the procedures and directives as listed in his or her appointment as well as:

  1. carry on the farm and/or business enterprise in the best interest of that enterprise, including depositing all income to the usual accounts, keeping proper financial records and written records and supporting documents for the business;
  2. keep all property insured for such amount and against such hazards as would be prudent in the normal course of business;
  3. not sell, dispose or transfer any secured property, nor use money thus obtained, WITHOUT THE PRIOR WRITTEN APPROVAL OF SECURED CREDITOR(S);
  4. not PAY ANY CREDITOR FOR A DEBT WHICH WAS OUTSTANDING AT THE TIME THE Stay of Proceedings began. The farmer must halt pre-authorized payments and automatic debits from his or her bank accounts, except as per (g). Since such payments could result in preference to some creditors over others, they may result in termination of the Stay. If the farmer is not in arrears with a creditor we suggest that he or she advise the creditor that payments may not be made during the Stay and make arrangements for catching up on the missed payments once the Stay expires;
  5. not incur any additional debts without the consent of the Administrator of the Farm Debt Mediation Service (FDMS);
  6.  in the case of corporations, not pay any salaries, wages, bonuses or dividends to the employers, officers, or shareholders, as the case may be, unless such transfers are for the living expenses of themselves or their families and unless the main and secured creditors have been advised as per (g) and/or approved as per (c); and
  7. if funds are available, the farmer may pay only essential operating expenses such as heat, power, feed and family living expenses.  The farmer should develop a budget of planned income and expenses during the stay of proceedings and review it with the main creditor(s) to avoid conflict for payments of expenses during the stay period.  The FDMS office will assist in this area, if required.

As per paragraph 14(2)(c) of the FDMA, compliance with the duties of the appointment and the above directives will help determine whether the Stay of Proceedings, now in place, may be extended or terminated.  Also note that, as per, paragraph 14(2)(d) of the FDMA, the administrator may direct that the Stay of Proceedings be terminated if the farmer has, by any act or omission jeopardized the assets.
 
Finally, the farmer is responsible for periodically verifying the presence and condition of the assets.  To meet this requirement the farmer must complete a "Guardian's Report to the Administrator" form and send this report to the Administrator of the FDMS before each extension of the Stay of Proceedings.

If you have any questions about the guardianship directives please contact the FDMS office in your region.

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