Ad Hoc Mandate and Conciliation
Take Early Action to Save Your Business
Ad Hoc Mandate and Conciliation: Act Early to Save Your Business
When a company begins to experience financial difficulties, the real danger is not always the economic situation itself, but a delayed response. Very often, executives continue to move forward “on instinct,” without a clear picture of their cash flow, their obligations, or their room to maneuver.
In this context, out-of-court procedures such as the ad hoc mandate and conciliation are powerful tools for preventing business difficulties. Yet they remain largely underutilized, due to a lack of information and an unjustified fear of the courts…
Why Do Executives Wait Too Long to Address Financial Difficulties?
In most cases, executives lack neither clarity nor goodwill. But several obstacles consistently arise:
• a lack of understanding of the company’s actual financial situation,
• a lack of internal financial or legal resources,
• an operational workload that leaves little room for analysis,
• the fear of “making the difficulties official.”
The result: by the time problems become apparent, it is sometimes already too late. The company then enters a downward spiral that leads directly to cumbersome insolvency proceedings, or even judicial liquidation.
Ad Hoc Mandates and Conciliation: Alternative Dispute Resolution Procedures That Are Still Little Known
Ad hoc administration and conciliation are procedures provided for under the Commercial Code. They can be initiated before the situation becomes critical. They are part of the mechanisms designed to prevent corporate financial difficulties.
What they have in common is that they are based on amicable negotiation, confidentiality, and keeping the CEO in charge.
The Ad Hoc Mandate: A Flexible and Confidential Solution
The ad hoc mandate is intended for companies that are not in default. It allows the company’s executive to request that the president of the commercial court appoint an ad hoc representative, who is an independent third party.
This procedure offers several advantages:
• It is completely confidential,
• It adapts to the company’s pace and needs,
• It facilitates dialogue with creditors,
• It allows for the development of tailored solutions (rescheduling, debt negotiation, new financing).
Conciliation: Reaching an Agreement with Creditors
Conciliation proceedings may be initiated as long as the company has not entered into insolvency or has been in such a state for less than 45 days.
It allows for further action:
• formalization of a comprehensive agreement with creditors,
• possibility of court approval,
• legal certainty regarding commitments,
• access to “new money” privileges for lenders.
This is a particularly effective tool for avoiding court-ordered liquidation when financial difficulties are still manageable.
Why These Procedures Work When They Are Initiated Early
50 to 70% of out-of-court proceedings result in a settlement when initiated early enough. However, they account for only a small fraction of the proceedings filed each year.
Taking action early on makes it possible to:
• maintain the trust of financial partners,
• protect the company’s reputation,
• avoid decisions made under pressure,
• safeguard business operations and jobs.
The Key Role of Executive Coaching
Ad hoc mandates and conciliation cannot be improvised. Their effectiveness depends largely on the quality of the support provided to the executive.
Being supported by independent professionals who are capable of:
• analyzing the financial situation,
• crafting a credible narrative,
• preparing for negotiations,
• anticipating short- and medium-term impacts,
All of this is a key factor in success, particularly for SMEs.
Ad Hoc Mandate and Conciliation: Management Tools, Not a Last Resort
Contrary to popular belief, these procedures do not equate to failure. On the contrary, they are tools for steering and managing a company. These tools are designed to help executives navigate a difficult period while safeguarding the future of their business.
Taking action early means maintaining control over decisions.
When should one consider an ad hoc mandate or conciliation?
Certain warning signs should raise red flags:
• recurring cash flow problems,
• difficulty meeting payment deadlines,
• increased reliance on a single financier,
• lack of medium-term visibility.
👉 The right course of action: don’t wait.
The sooner you take action, the more solutions are available.