THE STAY ORDER.

Ashburton Guardian, Volume 55, Issue 129, 13 March 1935, Page 3

THE STAY ORDER.

BUDGETARY SYSTEM EXPLAINED POSITION OF PROTECTED MORTGAGOR. WELLINGTON, March 12. What happens to a mortgagor farmer who, under the provisions of a stay order, is protected from any bankruptcy or foreclosure proceedings, but is required*!© conduct his farm under the budgetary'system for five years? Twelve lengthy "clauses in the Rural Mortgagors Final Adjustment Bill detail these central provisions of rehabilitation, which in the opinion of the Minister in charge are second in importance only to the machinery facilitating voluntary arrangements between a mortgagor and his creditors. A protective stay order is not issued if the Adjustment Commission considers the mortgagor's financial position enables him to carry on farming operations without it, or if it considers the mortgagor, by reason of the manner in which his farming has been conducted, is not deserving of further protection. Once a stay order is issued, payments may be suspended for twelve months, of interest, principal or other moneys though creditors affected by this provision have the right to appeal to the Court of Review. The farm revenue is to be handled by a trustee appointed

by the Adjustment Commission unless it considers the mortgagor suitable to perform these duties, as agent for the creditors. The trustee will keep a separate bank account and proper books, submitting six-monthly statements to the commission and he will be paid from funds of the estate. Appointment of Supervisor.

If a majority in value of creditors desire the appointment of a supervisor the Adjustment Commission may, in its discretion, employ such official who according to "the Bill, "shall act in an advisory capacity to the mortgagor in the conduct of his farming operations." If the mortgagor refuses to act in accordance with his advice the Adjustment Commission will report to the Court of Review which may discharge the protective order. The supervisor is to be paid from the proceeds of the farming operations. The first development on the issue of a stay order is that the trustee, in conjunction with the supervisor and Adjustment Commission, will prepare a budget for the year showing the estimated income of the mortgagor from farming operations and the estimated disbursements. This will be submitted to the mortgagor, who will be given an opportunity to make representations with respect to the amount proposed to be allowed to him in respect of living expenses and working expenses. Distribution of Income. The Adjustment Commission in giving directions for distribution of income will, states Clause 46 of the Bill, have regard to the following rules:'(a) Provision should be made for reasonable living expenses of the mortgagor and his family and for adequate working expenses, before any payment is made in respect of rates, taxes, rent or other statutory charges on the farm lands of the mortgagor. (b) Before any payment of interest is made to mortgagees of the land or chattels provision should be made for payment of rates and taxes* or rent on any land used by the mortgagor for agricultural purposes, and in so far as they have priority over of other statutory charges on the farm lands of the mortgagor. (c) As between mortgagees provision should be made for payment to them of interest in respect cfi the budgetary period in order of their respective priorities. Mortgagees have the right to appeal to the Court of Review in respect of priority decisions. Vendor's Rights.

The protection afforded a mortgagor during the stay order period also restricts the rights of a vendor under the customary hire purchase agreement if the Adjustment Commission is of opinion that the chattel concerned is required for farming operations.' The commission will fix the amount which the vendor shall receive during the currentcy of the restriction. If the trustee receives on account of the mortgagor any capital assets which are not connected witn his fanning operations, the Court may order realisation and distribution of the receipts to creditors in a manner which it will direct.