The French ad hoc mandate is a confidential procedure for the out-of-court settlement of disputes Its aim is to remedy a company’s financial situation before it is declared insolvent. The merits of ad hoc mandates , subject to the article L 611-3 of the French Commercial Code , are well established since these legal mechanisms have proved their worth in preventing and dealing with business difficulties.

There are many advantages to ad hoc mandates:

  • The company benefits from the assistance of a professional negotiator, often a court-appointed administrator chosen by the company director and his or her advisers, who will act as an ad hoc trustee.
  • The main creditors are (rapidly) brought together around the ad hoc trustee's negotiating table and are present for the duration of the negotiations.
  • The due date for all debts existing on the day the ad hoc mandate procedure starts is suspended, whatever the nature of the parties to whom monies are owed: tax and social security creditors, lenders, landlords, suppliers, hotel franchisors, etc.
  • Deadlines or discounts with creditors, in line with the debtor’s repayment capacity, can be negotiated based on the accounting situation on the day the ad hoc mandate procedure starts, as well as on forecast performance (verified by an independent auditor).
  • Lastly, in the event of dispute with an uncooperative creditor, the ad hoc mandate procedure can be converted into a conciliation procedure to obtain, from the commercial President of the Court, payment terms of 24 months.

Consequently, the parent company of a hotel or restaurant debtor can thus limit its risk and will not automatically be approached by its subsidiary's creditors (notably through guarantees granted in favour of its subsidiary), as it would have been without an ad hoc mandate.