Lifting the confidentiality of the ad hoc mandate in the event of the opening of collective proceedings

When a court is seised of an application to open receivership proceedings against a debtor who is benefiting or has benefited from an ad hoc mandate or a conciliation procedure in the preceding eighteen months, it may, of its own motion or at the request of the public prosecutor, obtain disclosure of the documents and records relating to the ad hoc mandate or the conciliation before ruling.

Based on the provisions of Article L 621-1 of the French Commercial Code, the Cour de Cassation ruled in this direction in a decision dated 22 November 2023.

In the case in question, a company had applied to open insolvency proceedings. This followed a mandat ad hoc procedure. Before ruling on the opening of the receivership, the court ordered, at the request of the public prosecutor, the disclosure of documents relating to the ad hoc mandate.

The company argued that the confidentiality attached to the ad hoc mandate could not be lifted by the court prior to the opening of the receivership and that the court could not therefore order the lifting of confidentiality before ruling on the application to open the receivership. This reasoning was not approved by the Cour de Cassation.

The purpose of the ad hoc mandate is to prevent companies from encountering difficulties. Established by the provisions of article L. 611-3 of the French Commercial Code, this procedure is flexible and, above all, strictly confidential.

The obligation of confidentiality is set out in article L. 611-15 of the French Commercial Code: “Any person involved in the conciliation procedure or an ad hoc mandate or who, by virtue of his duties, has knowledge thereof is bound by confidentiality”.

This is a major advantage of the ad hoc mandate. There are many people bound by this confidentiality, including the parties and third parties (Cass. com. 22 Sept. 2015 no. 14-17.377 and Cass. Com. 5 Oct. 2022 no. 21-13.108). The aim is to deal with the difficulties calmly and confidentially, and to avoid alerting the company’s creditors/partners who, fearing non-payment, would stop trading.

However, this confidentiality does not necessarily continue indefinitely with regard to the Court in the event of the opening of a subsequent insolvency procedure. The Court has the right to request that the confidentiality be lifted in its regard (and only in its regard).

The company and the Cour de Cassation disagreed as to the point at which confidentiality can be terminated pursuant to the provisions of Article L 621-1 of the French Commercial Code. The company argued that confidentiality could not be lifted with regard to the Court before the insolvency proceedings were opened.

A contrario, the Court of Cassation ruled, under Article L 621-1 of the Commercial Code, that once the application to open collective proceedings has been made, the judge may, before the hearing to open the proceedings, request the documents relating to the ad hoc mandate procedure, either ex officio or at the request of the public prosecutor. In our view, this decision should be approved: the documents relating to the ad hoc mandate thus enable the judges to make a better assessment of the debtor’s situation just before ruling on the opening of the collective proceedings.