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Case Studies

Farm Debt Mediation Case Studies 

Peter and his wife Penny own a farm in the mid-north of South Australia. In mid 2020, Peter, Penny and their bank entered into a Deed of Compromise and Release requiring the farmers to repay their facilities in early 2021. Peter and Penny did not meet these terms.

Also in 2021, Peter and Penny decide to divorce. It was agreed that Peter would ‘buy out’ his wife’s share of the farm, which has debts in excess of $300,000. The bank loans were secured by a farming property in the mid-north.

As required under the Farm Debt Mediation Act 2018, the bank sought Farm Debt Mediation through the office of the South Australian Small Business Commissioner (SASBC) prior to taking enforcement action.

A SASBC case officer was assigned to the case, as well as in independent mediator assigned by the Commissioner. All summary papers were read from both sides before an in-person mediation was held with Peter and a bank representative.

An agreement was reached between both parties, with the assistance of the Mediator and the outcomes included:  

  1. the bank capping the Peter’s debt at a significantly reduced amount
  2. the reduced debt to be fully repaid by an agreed set date
  3. no obligation for Peter to repay the debt before that set date
  4. subject to the debt being paid by the set date, no interest would accrue on the reduced sum.

If however, the debt was not fully repaid by the Peter on the set date, his debt would revert to the much higher current debt - with interest having accrued.

This arrangement was captured in a further Deed of Compromise and Release with the bank and bound all parties.

Having undertaken the Farm Debt Mediation, Peter now had the opportunity to finalise the pay-out to his former wife Penny and sell the property, or other assets in an orderly manner and against a significantly reduced debt. 

The bank also had its debt secured. 

Names have been changed 

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