Canada's Farm Debt Mediation Act ("FDMA") regulates disputes between farmers and their creditors and mandates unique procedures for secured creditors seeking to enforce on their debts. The FDMA provides a framework whereby insolvent commercial farmers can obtain a stay of any proceedings against them, and, with the assistance of a specially appointed administrator, direct a review of the farmer's financial affairs or even require mediation between the farmer and his or her creditors.
In order to afford farmers the opportunity to take advantage of this framework, special requirements for giving notice to enforce security are mandated by the FDMA, in place of the usual notice requirements set out at section 244 of the Bankruptcy and Insolvency Act.
Length of notice under the FDMA
Section 21 of the FDMA requires that creditors provide at least 15 business days' written notice before taking action to enforce on their security. Without such notice, a court may declare any of the creditor's enforcement measures null and void, and they will be required to comply with the notice requirements before they are able to enforce. A creditor's enforcement steps, if not in compliance with the FDMA, could give rise to civil liability for any damages the creditor's actions may have caused.
Method of notice
The 15 business day notice required under the FDMA must be in writing. The notice must advise the farmer of his or her right to seek a stay of proceedings under section 5 of the FDMA. Creditors must follow the regulations surrounding service of the notice, which vary according to whether the farmer is an individual, partnership or a corporation.
Farmers and creditors should seek the advice of an insolvency lawyer to ensure the optimal handling of debt payment and recovery in any situation involving commercial farming operations.