Directives to a Guardian Appointed under the Farm Debt Mediation Act
The following Directives to a Guardian are in effect as of the date indicated on the Stay of Proceedings.
The Guardian is responsible for periodically verifying the presence and condition of the assets pursuant to paragraph 17(2)(b) of the Farm Debt Mediation Act (FDMA). To meet this requirement the Guardian must complete a "Guardian's Report to the Administrator" form and send this report to the Administrator before any request for an extension of the stay of proceedings.
Creditors also receive a copy of these Directives to a Guardian to keep them informed of the responsibilities of the Guardian during the stay of proceedings. The name of the Guardian can be found on the Notice of Appointment of a Guardian issued with the Stay of Proceedings.
To effectively guard assets, the guardian must follow the procedures and directives as listed in his or her appointment as well as the following directives:
- carry on the farm and/or business enterprise in the best interest of that enterprise, including depositing all income to the usual accounts, keep proper financial records and written records and supporting documents for the business;
- maintain throughout the stay of proceedings all property 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;
- not sell, dispose or transfer any secured property, nor use money thus obtained, without the prior written approval of secured creditor(s);
- not pay any creditor for a debt which was outstanding at the time the Stay of Proceedings began. Since such payments could result in preference to some creditors over others, they may result in the termination of the Stay. Therefore, if the farmer is not in arrears with a creditor we suggest that the Guardian 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. This includes pre‑authorized payments and automatic debits from the farmer's bank accounts;
- not incur any additional debts without the consent of the Administrator;
- in the case of corporations, the corporation may not pay any salaries, wages, bonuses or dividends to employers, officers, or shareholders, as the case may be, except for the living expenses permitted pursuant to clause (g); and
- if funds are available, the farmer may pay only essential operating expenses such as heat, power, feed and family living expenses. If necessary, a budget of planned income and expenses should be developed during the stay of proceedings and reviewed with the main creditor to avoid any conflict relating to payments of expenses during the stay period. The Farm Debt Mediation Service office will assist in this regard, if required.
Compliance with the Guardian duties and the above directives will help determine whether the Stay of Proceedings may be extended or terminated. Paragraphs 14(2)(c) and (d) of the FDMA state that if the farmer has, contravened any directive or by any act or omission jeopardized the assets of the business, the Administrator may direct that the Stay of Proceedings be terminated.
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