Ad hoc mandate (mandat ad hoc) under French law

The ad hoc mandate is a confidential, out-of-court procedure for the prevention of business difficulties, governed by Art. L. 611-3 of the French Commercial Code. The president of the commercial court appoints an ad hoc agent at the director's request to assist in resolving the company's difficulties.

Legal framework

The ad hoc mandate is set out in Art. L. 611-3 and R. 611-18 et seq. of the French Commercial Code. It belongs to Title I of Book VI, dedicated to the prevention of business difficulties, and is, together with conciliation, one of the two confidential tools for early treatment of distress.

Conditions and appointment

The ad hoc mandate is open to any company facing difficulties that is not in cessation of payments. No turnover or workforce threshold applies. The legal representative files a petition with the president of the commercial court (for commercial entities) or of the judicial court. The president appoints an ad hoc agent — usually a judicial administrator — and defines the scope and duration of the mission in an order that is not published.

How the mission unfolds

Petition: description of the difficulties, cash position, schedule of due liabilities and available assets, objectives of the mission and, where relevant, a proposed agent.
Meeting with the court president: the president meets the director, verifies the absence of cessation of payments and assesses the usefulness of the measure.
Appointment order: it names the agent, sets the scope and duration, and remains confidential.
Negotiations: meetings with banks, public creditors, the landlord and strategic suppliers, chaired by the agent.
Outcome: a settlement agreement, a move to conciliation to have the agreement acknowledged or court-approved, or the opening of insolvency proceedings where difficulties cannot be overcome.

Ad hoc mandate compared with conciliation

Criterion	Ad hoc mandate	Conciliation
Legal basis	Art. L. 611-3	Art. L. 611-4 to L. 611-16
Cessation of payments	Excluded	Permitted for up to 45 days
Duration	Set by the president, renewable	4 months, extendable by 1 month
Confidentiality	Full	Full, except the approval judgment
Effect of the agreement	Contractual force between signatories	Acknowledgment (enforceable title) or court approval (new money privilege, stay of signatories' claims)

Cost and governance

The agent's fees are set by order of the court president after the debtor's written agreement on the terms of remuneration (Art. L. 611-14 of the Commercial Code); without such prior agreement, no appointment may be made. The director retains full management powers: the agent has neither representation nor decision-making power, the mission being one of assistance and negotiation.

When to file

A bank or bond maturity that cannot be refinanced in the short term.
An actual or anticipated financial covenant breach.
Loss of a major customer, significant litigation or an event affecting operations.
Cash tension identified in a 13-week forecast.
The need to prepare a disposal (pre-pack) or an investor entry confidentially.

The tool becomes unavailable once cessation of payments is characterised: conciliation then remains open for 45 days, after which formal insolvency proceedings must be requested.

Frequently asked questions

Does an ad hoc mandate stay creditor action?

No. No automatic stay attaches to an ad hoc mandate. Grace periods may be obtained by agreement of the creditors or, where a demand or claim is made, on the basis of Art. 1343-5 of the French Civil Code.

How long does an ad hoc mandate last?

The duration is set freely by the court president — in practice three to six months — and may be renewed at the director's request for as long as the company is not in cessation of payments.

Is the procedure public?

No. It is strictly confidential. The appointment order is not published and only the director, the agent and the creditors approached are aware of it.

Who pays the ad hoc agent?

Fees are borne by the debtor and set by order of the court president, on the basis of a prior written agreement between the debtor and the agent (Art. L. 611-14).

Can an ad hoc mandate lead to a sale of the business?

Yes. It is the usual framework for preparing a pre-pack sale, which is then approved by the court in insolvency proceedings opened for that purpose.

Contact

Phone: +33 1 45 03 20 20
Email: accueil@macmahon-avocats.fr
Address: 33 avenue Mac-Mahon, 75017 Paris, France