Introducing the dedicated Insolvency Court: A new judicial approach to handling insolvency matters

Guy and I have talked extensively and experienced firsthand how the current legal system allows for abuse of process in insolvency litigation. These unjustified and tactical delays have immediate commercial consequences, diminishing the value of the assets, when properties are often abandoned, unkept or just generally in limbo during these delay periods. The justice system in collaboration with the insolvency practitioners have developed a solution to overcome these delays.

In a landmark reform to improve the efficiency of insolvency litigation, the Johannesburg High Court has announced the establishment of a Dedicated Insolvency Motion Court (IMC) and Insolvency Trial Court (ITC). This pilot initiative, effective from 14 April 2025, will redirect all insolvency-related matters from the general motion and urgent courts to a specialized insolvency court.

The decision follows extensive consultation between insolvency legal experts and the Deputy Judge President Sutherland “who was instrumental in championing this cause, his enthusiasm, support, and guidance throughout this process was greatly appreciated” said members of South African Restructuring and Insolvency Practitioners Association (SARIPA). SARIPA also extended its sincere appreciation to Haroon Laher, Colin Strime, Adv. Graham Girdwood SC, Adv. Barry Gilbert SC and Adv. Chris Gibson for their time and effort in finalising the details of the dedicated insolvency court.

What the Dedicated Insolvency Courts Will Cover

The court is aiming to reduce bottlenecks and promote swift resolution of complex insolvency proceedings.

The IMC will handle:

• Sequestration, rehabilitation, and liquidation proceedings
• Business rescue applications
• Reviews of Master of the High Court’s decisions
• Insolvency-related interlocutory and urgent matters
• Applications involving notarial bonds, liquidators’ powers, and insolvency inquiries

The ITC will oversee:

• Matters requiring oral evidence or trials;
• Actions such as asset disposition challenges or section 424 company law cases.

Key Features of the New System

• 4-week enrolment cycle: Cases will be scheduled four weeks after the enrolment request.
• Elimination of urgency abuse: Only exceptional cases will bypass the standard cycle.
• Automatic reallocation: Cases already set for hearing in 2025 will transfer to the new insolvency roll.
• Strict procedural adherence: Misclassification or delays may result in punitive cost orders or fee penalties.

“This new framework demands discipline from practitioners but promises a faster, more focused route to justice,” said Ige Ejekwu Client Manager for Business Rescue and Liquidation.

How the System Will Work

• Enrolment process: Attorneys must classify and submit matters correctly on the online filing systems.
• Practice notes and heads of argument: Required at the point of enrolment.
• Urgent matters: Will require strict justification and are limited to interim relief.

“The court is closing the door to tactical delays and frivolous urgency claims. It’s about time,” said Ige.

Evaluation and Long-Term Vision

The pilot will be reviewed before incorporation into the Division’s consolidated Practice Manual. The number of judges allocated will vary depending on case volumes.

Implications and Professional Impact

The legal community views this as a forward-thinking shift in the insolvency market:

“It mirrors the efficiency gains seen in the Commercial Court. With insolvency work growing, this specialization is necessary, but it may also be a sad reflection on the state of the economy.” notes Ige.

Our view as Galetti Corporate Real Estate

The Dedicated Insolvency Courts represent a bold move toward efficiency and specialisation in a field that often suffers from procedural backlog, delaying processes which could have a direct effect on the value of an asset which during that time could be alienated / disposed or lose its value. If executed well, this could serve as a model for other high courts dealing with commercial litigation overload. Here at Galetti, we are excited about these developments in insolvency litigations, we have experienced first hand the results of these tactical legal delays and we are very keen to see how quickly these court decisions will translate into real time commercial effectiveness.

Guy and myself will be attending the SARIPA Northern Region Conference on Friday, 9 May 2025 hosted by Fluxmans Attorneys. The conference will be the first gathering of insolvency practitioners since the inception of the dedicated insolvency court, we are thrilled to engage with industry leaders to understand how this new legal approach can enhance the restructuring industry. We hope to see you there.