Learn about preventive procedures

Richard Cassonnet, Customer Support Unit Manager, and Jean-Luc Boisnon, Service Production Manager, at Ellisphere, discuss the main issues surrounding preventive procedures.

The legislator has set up 3 preventive procedures at the initiative of the manager:

  • The ad hoc mandate
  • Reconciliation
  • The backup

It should be noted that there is also an accelerated safeguard procedure, which is very rarely used.

It is the state of cessation of payments which is characterized by the impossibility for the company to face its due liabilities (debts that have fallen due) with its available assets (funds that the company can immediately dispose of).

In practical terms, it is the fact of not having the necessary cash to pay an undisputed debt on time.

The ad hoc mandate and conciliation procedures are confidential. They are not officially published.

The safeguard procedure is not confidential since it is published in the BODACC (Bulletin Officiel d'Annonces Civiles et Commerciales) and/or in a JAL (Journal d'Annonces Légales).

The agreement reached at the end of the ad hoc mandate procedure remains confidential and is not subject to any formality.

The agreement reached at the end of the conciliation procedure, which must be recorded by the president of the court, is also confidential. However, in order to give additional force to this agreement, a homologation of the conciliation can be requested. The homologation judgment is then published in the BODACC, but the details of the agreement remain confidential.

Only the legal representative of the company can request the opening of a preventive procedure. The creditors or the public prosecutor's office cannot summon the company in the framework of an ad hoc mandate, conciliation or safeguard procedure.

The safeguard procedure is a collective procedure, because it concerns all the creditors of the company, contrary to the procedures of ad hoc mandate and conciliation which only concern the creditors taking part in the agreement.

During an ad hoc mandate, conciliation or safeguard procedure, the manager continues to manage his company, but is not relieved of his duties. Indeed, the interveners in the procedure only have a mission of advice and assistance. They propose solutions in order to avoid the state of cessation of payments and thus redress the company's situation.

The observation period for a safeguard procedure is fixed at 6 months, renewable once.

The conciliation procedure has a time limit of 4 months which can be extended without exceeding 5 months.

As for the ad hoc mandate, it is a procedure that is not subject to a time limit. However, the mandataire ad hoc is generally appointed for a period of 3 months, renewable several times.

Preventive procedures have been made available to managers in order to anticipate difficulties and thus avoid the state of cessation of payments. The company will not be able to request the opening of an ad hoc mandate or safeguard procedure if these difficulties are proven.

However, the legislator authorizes the opening of a conciliation procedure even if the company has been in a state of suspension of payments for less than 45 days.


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