French Mandat Ad Hoc and Conciliation: Act Before Insolvency

Cash does not deteriorate overnight. In the vast majority of business files, warning signs appear months before a break: customer receipts systematically late, revolving credit at its ceiling, social security instalments deferred, a key supplier tightening its terms. A director who acts on these signals still has room to manoeuvre. One who waits until the company is formally in a state of insolvency — what French law calls cessation des paiements — faces a much narrower corridor, where creditors no longer negotiate: they demand.

French commercial law (the Code de commerce, Livre VI) provides two confidential amicable procedures to structure that negotiation before the breaking point: mandat ad hoc and conciliation. Both share the same underlying logic — preserve confidentiality, keep the director in control, open a supervised dialogue with creditors — but their triggers, durations and legal effects differ on points that matter greatly. The accountant or outsourced CFO plays a central role in this process: building a reliable cash diagnosis, structuring the company's position vis-à-vis its creditors, and enabling the director to negotiate on factual grounds.

Direct answer. Mandat ad hoc (art. L611-3 Code de commerce) is reserved for companies that are not in a state of insolvency (cessation des paiements); the duration of the mission is not limited by law. Conciliation (art. L611-4 et seq.) is available when insolvency has not lasted more than 45 days; it runs for four months, extendable once by one month (five months maximum). Both procedures are confidential. A conciliation agreement can be either noted by the court president (remaining confidential) or approved (homologué) by the court (becoming public but granting a statutory "new money" priority).

The two procedures are frequently confused, including at board level. The table below sets out the decisive parameters.

Our reading. Mandat ad hoc suits situations where the difficulty is real but cash is still positive, and where the director needs a credible third party to frame the negotiation without a statutory deadline. Conciliation becomes necessary once insolvency is imminent or has already been reached for fewer than 45 days, or when the company needs a formal enforceable agreement — particularly to secure new financing that carries the statutory new-money priority.

Cessation des paiements (state of insolvency) is defined under French law as the impossibility of meeting due and payable liabilities (passif exigible) with available assets (actif disponible). This is narrower than a cash squeeze: it requires that debts already due cannot be honoured from liquidity actually on hand — confirmed undrawn credit facilities and quickly realisable assets can in principle be taken into account.

A director who determines that the company is in a state of insolvency must file a declaration with the commercial court within 45 days, unless a conciliation request has been filed in the meantime. Failure to observe this deadline is not academic: it exposes the director to personal liability for insuffisance d'actif (asset shortfall) in the event of subsequent collective proceedings.

This 45-day threshold is precisely where the choice between amicable and collective procedure is made.

When difficulties exceed what amicable procedures can resolve, Livre VI of the Code de commerce provides three collective proceedings, each with a different condition regarding insolvency.

The underestimated risk. Many directors wait for collective proceedings thinking they offer more protection. In reality, sauvegarde — the most protective procedure — is only available while the company is not yet insolvent. Acting late typically means forfeiting this tool. Redressement judiciaire partially removes the director from certain decisions and increases exposure to personal liability.

In the financial monitoring and outsourced-CFO engagements our firm handles, certain signals recur consistently before a situation becomes critical:

• The 13-week cash forecast shows an unfunded trough within 60 to 90 days.
• A short-term credit line has reached its ceiling and the bank has not yet responded to a renewal request.
• Supplier payment terms have been exceeded for more than a month.
• URSSAF contributions or tax instalments have been deferred without a formalised plan.
• A major customer (accounting for more than 15–20 % of revenue) is in dispute or significantly late.
• The director has started prioritising payments by creditor urgency, without a global view.

No single signal automatically triggers a procedure. But their combination, or their persistence over two to three months, justifies a formalised cash diagnosis and a conversation with a lawyer specialised in business prevention.

The following steps reflect how mandat ad hoc and conciliation files typically unfold in practice.

1. Identify and quantify the difficulties. The accountant or outsourced CFO builds a 13-week cash forecast, identifies the likely break date, ranks creditors by criticality, and quantifies the financing or rescheduling requirement.
2. Assess the insolvency position. Before filing any request, the precise insolvency status must be established. This determines which procedure is available and must be settled with appropriate legal advice.
3. File a request with the president of the commercial court (tribunal de commerce) or the civil court depending on the nature of the business. The process is confidential. The president appoints a mandataire ad hoc or a conciliateur — typically a court-appointed administrator or licensed professional.
4. Mediator appointed. The mediator has no binding authority over creditors. The mission is to facilitate negotiation, lend credibility to the company's plan, and obtain formal commitments from key creditors: banks, URSSAF, the DGFiP (tax authority), landlords, strategic suppliers.
5. Negotiation and construction of the agreement. The company presents its plan: shareholder effort, cost savings, debt rescheduling, customer collection plan, and possibly an asset disposal. Each creditor assesses the proposed agreement against what it would recover in collective proceedings.
6. Formalisation. Under mandat ad hoc, the agreement is informal and does not require judicial formality. Under conciliation, the director chooses between having the agreement noted (confidential, simple record) or approved (homologué) by the court — made public, but giving new money injected during the conciliation a statutory priority over other creditors in any subsequent proceedings.
7. Execution and monitoring. Once the agreement is signed, the mediator's mission ends. Monitoring falls to the company, its accountant, and its advisers.

The mediator appointed by the court works from reliable financial documents. An incomplete file or an over-optimistic cash forecast weakens the company's negotiating position and undermines the director's credibility with creditors.

On our restructuring and financial monitoring engagements, the most frequent blockages are: a cash forecast built on unconfirmed collection assumptions, an incomplete debt list (missing rent arrears, disputed supplier invoices, called guarantees), and no downside scenario. The outsourced CFO or accountant adds direct value here — building the diagnosis on verifiable figures, structuring the file for the court and creditors, and supporting the director in negotiation meetings.

The documents to prepare before filing a request include:

• 13-week cash forecast (receipts, disbursements, priority debt, base case and downside scenario)
• Aged customer and supplier balances, ongoing disputes and confirmed receipt promises
• Tax and social security debt schedule, including any instalments in progress or requested from DGFiP and URSSAF
• Recent profit-and-loss account, operating forecast, order book and commercial pipeline
• Summary of bank facilities, covenants, guarantees and security interests
• Operational action plan: savings already made or projected, spending freeze, customer collection drive, cash measures

For a detailed guide on rescheduling tax and social security debts in this context, see our article on rescheduling tax and social debts with DGFiP and URSSAF.

A services SME (approximately fifty employees, revenue of the order of four million euros) faces a delayed receipt of 380,000 euros from two key customers, tied up in contractual disputes. URSSAF contributions and instalments on a bank loan fall due within six weeks. Insolvency (cessation des paiements) is not yet established, but the cash forecast shows a likely break in 40 days.

The firm prepares the diagnosis in ten days: a week-by-week cash forecast, full debt schedule, base case (partial recovery within 90 days) and downside scenario (no recovery for six months). The director files the conciliation request. A conciliateur is appointed.

Within the conciliation, discussions produce an illustrative rescheduling agreement along the following lines:

• URSSAF: overdue contributions spread over 18 monthly instalments, subject to current payment
• Principal bank: three-month deferral of loan repayments, with partial rate renegotiation
• Strategic supplier: 90-day payment extension on overdue invoices, in exchange for a firm new order commitment
• Landlord: two months' rent deferred, to be repaid at end of tenancy

The agreement is noted (not court-approved) to preserve confidentiality. The SME returns to a normal operating level as customer receipts materialise partially. The agreement is honoured. This example is illustrative and does not indicate results that would be obtained in any specific file.

Across the insolvency-prevention files our firm handles, several errors appear consistently:

• Waiting until insolvency is established before seeking advice, by which point the most protective procedures (mandat ad hoc, sauvegarde) are no longer available.
• Submitting a single-scenario cash forecast with no downside case. The mediator and creditors always test assumptions; a plan with no sensitivity analysis undermines the director's credibility.
• Negotiating separately with each creditor before filing — this can create conflicting commitments and weaken the overall position.
• Confusing signed revenue with actual cash receipts: executed contracts do not fund overdue debts if the money has not yet arrived.
• Underestimating timelines: appointment of a mediator, negotiations, and drafting an agreement each take several weeks. Acting too late makes the calendar unworkable.
• Overlooking director duties on insolvency: personal liability for asset shortfall (insuffisance d'actif) is a real risk where obligations are not met.

The right time is not the crisis itself — it is the signal. If the cash forecast shows an unfunded trough within 90 days, if debts to a significant creditor have been overdue for more than a month, or if the company has started prioritising payments based on perceived urgency, this is the moment to organise an initial diagnosis.

Our firm supports directors under cash pressure in building a clear file before filing with the court: cash forecast, working-capital diagnosis, debt schedule, scenarios, and preparation for creditor meetings. We coordinate with specialist legal advisers (restructuring lawyers, court-appointed administrators) so the director has a coherent team from the first contact with the court.

Our outsourced CFO service for SMEs and startups includes crisis monitoring as part of its core scope.

For further reading on the collective proceedings that may follow if amicable procedures do not succeed, see our guide on French collective proceedings 2026: alerts, steps and outcomes. For the alert procedure that may be triggered by a statutory auditor, see our guide on the commissaire aux comptes alert procedure.

Disclaimer. This article is for information purposes only. French amicable and collective proceedings are governed by complex and frequently amended legislation. The determination of insolvency (cessation des paiements), applicable deadlines, and the effects of any agreement must be assessed case by case with qualified legal advisers (restructuring lawyer, court-appointed administrator). This article does not constitute legal advice and does not replace a formal engagement. Current as at 29 May 2026. Sources: legifrance.gouv.fr — Livre VI du Code de commerce; entreprendre.service-public.fr.