A receivership is a procedure designed to enable a company to maintain its operations, maintain employment and pay off its debts. It is governed by articles L.631-1 et seq. and R.631-5 et seq. of the French Commercial Code.
What is an ad hoc mandate?
An ad hoc mandate is a preventive and confidential mission entrusted to an ad hoc agent to resolve a company’s difficulties before it becomes insolvent.
The ad hoc mandate is particularly flexible, with minimal formalities, and can be adapted to deal with the difficulties encountered by a company. A company manager may submit a proposal for an ad hoc agent to be appointed by the president of the court. In this case, the company manager must specify their identity and address.
Ad hoc mandates are often entrusted to professionals working with companies in difficulty, i.e. insolvency practitioners. The terms and conditions of the ad hoc agent’s remuneration must be set out in the order appointing him or her.
Download the application form for the appointment of an ad hoc agent
What situations are covered by the ad hoc mandate?
The task entrusted to the ad hoc agent is perfectly suited to the difficulties encountered by the company requesting the initiation of an ad hoc mandate.
Ad hoc mandates may therefore cover :
- financial difficulties (e.g. negotiations with a banking partner, landlord, social security and tax creditors) ;
- commercial difficulties (e.g. discussions with a strategic supplier or partner);
- legal difficulties.
Who is involved in an ad hoc mandate?
Company managers, who are the only ones entitled to do so, request the opening of an ad hoc mandate, by applying to the President of the Commercial Court if their company is engaged in a commercial or artisanal activity, or to the President of the Judicial Court in other cases (farmers, civil companies or groupings, associations, liberal professions, etc.).
If the President accepts the request, he appoints an ad hoc agent to help the company manager in resolving the difficulties.
When does the ad hoc mandate take effect?
Upon receipt of the company manager’s request, the president of the court summons the manager to a confidential meeting to hear his or her observations and understand the purpose of the proposed assignment.
If the president of the court accepts the request, he appoints an ad hoc agent to assist the manager in resolving the difficulties: this is when the ad hoc mandate begins for the period set out in the president’s decision (usually four months, which can be renewed without limit, as long as this is necessary, and as long as the company is not insolvent).
How does an ad hoc mandate work?
The ad hoc agent begins his or her assignment by taking stock of the company’s situation with the manager, in order to establish together a diagnosis of the solutions to be implemented.
He or she then conducts discussions on the basis of this prior joint work and the assignment entrusted to him or her. The company manager continues to manage the business alone for the duration of the mandate.
What are the effects of the ad hoc mandate?
The ad hoc mandate is not a binding assignment: only the creditors brought into the discussions by the ad hoc agent are informed, and they are under no obligation to participate or contribute.
However, the supervision of these discussions by an independent third party, the ad hoc agent, usually encourages creditors to take part in the meetings, during which they will be presented with an objective view of the company’s situation and prospects.
