Ad hoc mandate lawyer in Paris: negotiating with your creditors before cessation of payments.

An ad hoc mandate is a preventive procedure in which the president of the court appoints, at the debtor's request, an agent entrusted with an assignment that the president defines (Article L. 611-3 of the French Commercial Code). Only the debtor can request it: no creditor, shareholder or employee can impose it. The text sets neither a duration nor a threshold; in practice, the procedure only makes sense if negotiation can still resolve the difficulty. The code designates the commercial court for a commercial or craft activity, and the judicial court in other cases. In Paris, for procedures opened since 1 January 2025 and for four years, the president of the economic activities court has jurisdiction whatever the debtor's status and activity, except for the professions referred to in the second paragraph of Article L. 722-6-1 of the French Commercial Code, such as lawyers or notaries (Article 26 of Law No. 2023-1059 of 20 November 2023; order of 5 July 2024). The written request comes from the legal representative of the legal entity or from the debtor if an individual, sets out the reasons for it and states, where applicable, the identity and address of the proposed agent (Article R. 611-18 of the French Commercial Code). The president then summons the director to hear their observations, then issues an order setting the purpose of the assignment and the terms of remuneration (Article R. 611-19 of the French Commercial Code). The director remains at the head of the company throughout the assignment. In Paris, the registry of the economic activities court has a prevention department.

Both procedures pursue the same aim, a confidential negotiation with creditors, but their framework differs. An ad hoc mandate has no statutory duration and its assignment is freely defined by the president (Article L. 611-3 of the French Commercial Code). Conciliation is reserved for a debtor that has not been in cessation of payments for more than forty-five days (Article L. 611-4 of the French Commercial Code), and its duration is limited to four months, five with an extension, unless a request for recording or approval is made before that deadline (Article L. 611-6 of the French Commercial Code). In return, conciliation offers tools that an ad hoc mandate does not: payment deferrals imposed on a creditor who is pursuing recovery, write-offs granted by public creditors, preparation of a sale (Article L. 611-7 of the French Commercial Code), and then, after approval, the priority granted to new money (Article L. 611-11 of the French Commercial Code). It leads to a recorded or approved agreement with statutory effects (Article L. 611-8 of the French Commercial Code). An ad hoc mandate is therefore suited to a targeted negotiation with a few partners, and conciliation to a broader restructuring that needs protection. The two can follow one another: an ad hoc mandate may precede a conciliation when the negotiation needs to be consolidated.

Yes, but within a narrow window. Conciliation remains open to a debtor that has not been in cessation of payments for more than forty-five days (Article L. 611-4 of the French Commercial Code). Cessation of payments means being unable to meet liabilities that are due out of available assets; a debtor that shows that its credit reserves or the moratoria it has obtained allow it to meet them is not in that situation (Article L. 631-1 of the French Commercial Code). The application must also state, where applicable, the date of cessation of payments (Article R. 611-22 of the French Commercial Code). Beyond that period, conciliation is no longer possible, and a debtor that has not requested it within that period must apply for judicial reorganisation or judicial liquidation at the latest within forty-five days of cessation of payments (Article L. 631-4 of the French Commercial Code; Article L. 640-4 of the French Commercial Code). For an approved agreement, the court also checks that the debtor is not in cessation of payments or that the agreement brings that situation to an end (Article L. 611-8 of the French Commercial Code). The exact date is therefore reconstructed before any application, from unpaid instalments, bank statements and the creditors' commitments. A mistake on this point can undermine the whole negotiation.

The president is seised by an application setting out the debtor's economic, financial, social and asset position, its financing needs and, where applicable, the means of meeting them (Article L. 611-6 of the French Commercial Code). The regulatory part lists the documents to be attached: identification number, statement of receivables and debts with a repayment schedule and a list of the main creditors, statement of security and off-balance-sheet commitments, annual accounts, financing table and a statement of realisable and available assets, operating assets excluded, and of liabilities that are due, for the last three financial years where these have been drawn up, a statement on honour that there has been no conciliation in the previous three months, and a declaration on whether a third party is to bear the costs (Article R. 611-22 of the French Commercial Code). The proposals of the prospective conciliator on remuneration are attached to the application (Article R. 611-47-1 of the French Commercial Code). The debtor may propose the name of a conciliator and may challenge the appointment on the terms laid down by decree. The president may also obtain information from statutory auditors (commissaires aux comptes), banks or social security bodies, and appoint an expert. A precise file speeds up the opening and gives the conciliator a credible basis for discussion from the outset.

No. The confidentiality under Article L. 611-15 of the French Commercial Code does not protect only the content of discussions. In a judgment of 3 July 2024, the Court of Cassation holds that it "covers the decision to open that procedure, its existence and its content" (our translation). It concludes that the opening of the conciliation "was confidential information that Société générale could not use to justify a declaration of default, regardless of the fact that this information had been disclosed to it by the beneficiary of the procedure" (our translation) (Cass. com., 3 July 2024, No. 22-24.068). The bank therefore could not base a prudential declaration of default on the mere existence of the procedure, and the court of appeal should have put an end to that manifestly unlawful disturbance. This outcome matters for a director who informs the bank in order to involve it in the negotiation: the information passed on remains protected. An urgent application (référé) before the president of the court makes it possible to obtain swift measures where a creditor exploits that information. The firm checks the chronology of the exchanges and the use made of the information before acting.

The Court of Cassation accepts that disclosure by the press can give rise to liability. It holds that "the effectiveness of this principle would not be ensured if this provision did not make it a fault for press organisations, except in the case of a debate of general interest, to disclose information so protected" (our translation) (Cass. com., 13 June 2019, No. 18-10.688). In that case, a trade website had published, as the meetings went on, figures and the state of the negotiations conducted under the supervision of the ad hoc agent and then the conciliator; the publisher's appeal to the Court of Cassation was dismissed. In a related decision, the Court approved the removal of the articles and the ban on publishing new ones, the court of appeal having found that "these articles could only jeopardise the outcome of the amicable prevention procedure and weaken the position of the companies of the Consolis group" (our translation) (Cass. com., 13 February 2019, No. 17-18.049). The limit remains a debate of general interest: general information about the existence of difficulties is not judged in the same way as a report of the negotiations with figures. The analysis is therefore carried out publication by publication.

In principle no, and the rule can turn against the director. A manager argued that confidentiality applied only towards third parties and that the manager could rely on the content of the exchanges against the bank in order to establish its liability. The Court of Cassation rejected that argument, which assumed that the obligation "applies only towards third parties and not between the parties to the procedure" (our translation), and dismissed the appeal (Cass. com., 5 October 2022, No. 21-13.108). That decision is unfavourable to the director: statements made and documents exchanged in the negotiation do not become evidence that can be freely used in later proceedings between the same parties. A director considering an action against a creditor must therefore build the evidence from material outside the procedure, such as contracts, earlier letters or credit decisions. The firm sorts the available documents before any action, so as not to base a claim on protected material. The same caution applies to a guarantor or a shareholder who has been told of the negotiation.

It gives way in part before the court. Where the debtor has benefited from an ad hoc mandate or a conciliation in the previous eighteen months, the opening of insolvency proceedings is examined in the presence of the public prosecutor's office (Article L. 621-1 of the French Commercial Code). The Court of Cassation holds that the court seised of an application for judicial reorganisation "may, of its own motion or at the request of the public prosecutor's office, obtain disclosure of the documents and deeds relating to the ad hoc mandate or the conciliation, notwithstanding the provisions of Article L. 611-15 of the same code" (our translation) (Cass. com., 22 November 2023, No. 22-17.798). This outcome is unfavourable to a debtor who wanted to keep those documents out of the debate. The Paris Court of Appeal nevertheless limits its scope: "confidentiality under Article L. 611-15 of the Commercial Code can be lifted only on the day of the hearing examining the opening of the judicial reorganisation procedure" (our translation) (CA Paris, pôle 5 ch. 8, 6 February 2024, No. 23/12128). It therefore refused to extend this to the supervisory judge, the court-appointed officers and later trial panels. The director should expect that the negotiation papers may be read by the court that opens the proceedings.

The opening of a conciliation does not automatically stop enforcement. But the debtor may ask the judge who opened it to apply Article 1343-5 of the French Civil Code against a creditor who has served formal notice or brought proceedings, or who has not agreed, within the period set by the conciliator, to suspend the due date of its claim (Article L. 611-7 of the French Commercial Code). That provision allows payment of sums due to be deferred or staggered within a limit of two years (Article 1343-5 of the French Civil Code); after a refusal to suspend, the deferral of claims not yet due is limited to the length of the conciliator's assignment. The Aix-en-Provence Court of Appeal upheld such time to pay, finding that "the aforementioned provision does not require that the grant of payment time requested during a conciliation be subject to the debtor not having been in cessation of payments for more than 45 days" (our translation) (CA Aix-en-Provence, ch. 3-2, 21 May 2026, No. 25/04155). It added that this time would be made subject to the conclusion of an agreement, which the text allows. The request is prepared with the conciliator, whose observations are heard, and relies on the forecast cash position. An ad hoc mandate does not provide this mechanism, which often points towards conciliation when a creditor is being aggressive.

A recorded agreement is made enforceable by the president, on the joint application of the parties and on the basis of a certified declaration by the debtor that it was not in cessation of payments when the agreement was concluded or that the agreement brings that situation to an end; the decision is not published and cannot be challenged (Article L. 611-8 of the French Commercial Code). An approved agreement is ordered by the court, at the debtor's request, if the company is not in cessation of payments or if the agreement brings that situation to an end, if its terms ensure the continuity of the business and if it does not harm non-signatory creditors. The approval judgment is filed with the court registry, is made public and may be the subject of third-party opposition (Article L. 611-10 of the French Commercial Code). In exchange for that publicity, approval opens access to the priority granted to new cash or new assets (Article L. 611-11 of the French Commercial Code) and, except in cases of fraud, prevents the date of cessation of payments from being set back to before the final approval decision (Article L. 631-8 of the French Commercial Code). In both cases, the agreement suspends enforcement of the claims it covers while it is being performed (Article L. 611-10-1 of the French Commercial Code). The choice therefore depends on the need for fresh money and on the risk of later proceedings.

The opening of safeguard proceedings, judicial reorganisation or judicial liquidation ends a recorded or approved agreement by operation of law, and creditors recover their claims and security, less any sums received (Article L. 611-12 of the French Commercial Code). The Court of Cassation states that the creditor "does not keep the benefit of the new security obtained under the agreement" (our translation): in that case, the guarantees granted in return for the waivers of debt lapsed, and the extent of the guarantor's commitment was assessed by reference to the original guarantees (Cass. com., 25 September 2019, No. 18-15.655). It distinguishes fresh money: a creditor that, for the purposes of the agreement, made an advance giving rise to a new claim secured by a guarantee "is entitled to ask the guarantor to perform that commitment, despite the lapse of the agreement" (our translation) (Cass. com., 26 October 2022, No. 21-12.085). This second outcome is unfavourable to a guarantor that secures the new financing. Before signing a new guarantee, it is therefore necessary to know whether it covers a waiver or a deferral, or new financing.

Not necessarily. Payments of debts that have fallen due, made from the date of cessation of payments, may be annulled if the creditor knew of that cessation, apart from the exclusions the text provides for certain social security and tax levies (Article L. 632-2 of the French Commercial Code). In a case decided on 14 December 2022, a company had entered into an advisory agreement during its conciliation and had paid under it after its cessation of payments occurred. The Court of Cassation approved the annulment of those payments, made "without Prosphères having argued before the court of appeal that TBI then benefited from a procedure comparable to a preventive restructuring framework" (our translation) within the meaning of the European directive, and dismissed the appeal (Cass. com., 14 December 2022, No. 21-14.206). This unfavourable decision is a reminder that conciliation does not by itself create immunity for payments. Only approval prevents, except in cases of fraud, the date of cessation of payments from being set back to before the final decision that grants it (Article L. 631-8 of the French Commercial Code). Payments made during the negotiation must therefore be chosen and documented.

The president sets the terms of remuneration when making the appointment, after the debtor has agreed, according to the work expected; the remuneration may not depend on the amount of debt waivers obtained or take the form of a fixed opening fee (Article L. 611-14 of the French Commercial Code). The proposals of the agent or conciliator are attached to the request (Article R. 611-47-1 of the French Commercial Code). The Court of Cassation requires that the maximum amount appear in those terms: "where no maximum amount is stated, the remuneration of the ad hoc agent or conciliator cannot be determined by reference to their proposals and to the debtor's agreement" (our translation); the judge setting the fees then fixes them by reference only to the work actually done and the costs incurred (Cass. com., 3 October 2018, No. 17-14.522). The remuneration is fixed at the end of the assignment by an order that can be challenged before the first president of the court of appeal. The first president of the Douai Court of Appeal thus reduced a conciliator's fees after recalling that the terms of remuneration include "the criteria on the basis of which it will be set, its maximum amount" (our translation) (CA Douai, order of the first president, 16 June 2025, No. 24/05854). The assignment agreement therefore deserves careful reading before signature.

The law neutralises this kind of clause. Any stipulation that changes the terms on which an ongoing contract continues, by reducing the debtor's rights or increasing its obligations, solely because an ad hoc agent has been appointed, a conciliation opened or a request made to that end, is deemed unwritten (Article L. 611-16 of the French Commercial Code). A clause providing for early repayment, termination or an increased charge triggered by the application alone therefore cannot take effect. The same provision deems unwritten a clause that charges the debtor with the fees of the creditor's counsel, for the share that exceeds the proportion set by order. The protection targets the fact of using the procedure, not the financial situation itself: a clause tied to a ratio or an unpaid sum must be examined separately. The firm reads credit, lease and supply contracts before the application is filed, to assess the clauses that could be invoked. This review also allows the ad hoc agent or conciliator to be properly informed of the contracts on which the business depends.