Benkel v East-West German Real Estate Holding & Ors

This is a first‑instance claim by the trustee in bankruptcy of Mr Eliezer Fishman seeking declarations and transfer of control of companies which the trustee alleges were acquired to conceal the bankrupt's assets. The court found that the English company East‑West UK was used as part of a structure intended to conceal ownership and that the nominal participants (Ms Helbet and Mr Dikautschitsch) acted as nominees. The judge held that Ms Helbet was a nominee for Mr Dikautschitsch and that, in turn, Mr Dikautschitsch held his interest as nominee for Mr Fishman; consequently the trustee (Mr Benkel) now beneficially owns those interests following recognition of the Israeli bankruptcy under the Cross‑Border Insolvency Regulations 2016. The court also made subsidiary findings that a number of loan agreements were back‑dated, that key witnesses were unreliable on material points, and that adverse inferences could properly be drawn from the defendants' failure to call certain relevant persons. The judge ordered transfer of Ms Helbet’s powers, rights and interests in East‑West UK to the trustee.

Background and parties: The claimant, Mr Joseph Benkel, is the trustee in bankruptcy of Mr Eliezer Fishman (Israeli bankruptcy recognised in England). Defendants were East‑West German Real Estate Holding (East‑West UK), its sole director and member Ms Mirella Helbet, and (joined during the trial) Mr Willibald Dikautschitsch. The dispute concerned a corporate transaction in October–November 2016 by which shares in a German company, East‑West Germany, were transferred to East‑West UK and related steps involving JURAG Chemnitz GmbH & Co KG.

Nature of the claim and relief sought: The trustee sought declarations that the defendants held powers, rights and interests as nominees or trustees for Mr Fishman (now for the trustee) and orders that the shares and control be transferred to the trustee. Procedural steps included recognition of the Israeli main proceedings (Cross‑Border Insolvency Regulations 2016), a proprietary injunction and receivership of East‑West Germany shares, and orders under the Taking of Evidence Regulation (Council Regulation (EC) No 1206/2001) to take evidence in Germany.

Issues tried:

• What was the purpose of the 2016 transaction transferring East‑West Germany shares to East‑West UK?
• Whether Ms Helbet and Mr Dikautschitsch were nominees and, if so, for whom (Mr Dikautschitsch or Mr Fishman)?
• Whether loan agreements dated 8 October 2016 were genuine or back‑dated.
• Credibility and weight to be given to key witnesses; whether adverse inferences should be drawn from non‑attendance of other relevant witnesses.

Court’s reasoning and findings: The judge analysed contemporaneous documents, witness testimony and covert inquiry agent transcripts. He rejected significant parts of the defendants’ evidence, in particular finding that loan agreements had been back‑dated in 2019, and that witnesses (including Mr Dikautschitsch and Ms Menipaz) were unreliable on key points. The court accepted that Ms Helbet acted as a nominee for Mr Dikautschitsch and, on balance of probabilities and having regard to involvement of Mr Rese, Mr Katz and Mr Kreider in structuring the transaction, it concluded that the concealment structure had been created for the benefit of Mr Fishman. The judge drew adverse inferences from the defendants' failure to call highly relevant persons (notably Mr Kreider, Mr Rese and Mr Katz) and concluded that the trustee had established that the ultimate beneficial interest was Mr Fishman’s and thus passed to the trustee on bankruptcy recognition. The practical consequence was an order that Ms Helbet transfer her powers, rights and interests in East‑West UK to the trustee. The court declined to grant relief in relation to JURAG because no relief was pleaded against the third defendant in that regard.

First instance: The claimant's case (in substance) succeeds. The court found that the transfer and related steps were executed as part of a concealment structure; Ms Helbet was a nominee for Mr Dikautschitsch and Mr Dikautschitsch held his interest as nominee for Mr Fishman. Because Mr Fishman is bankrupt and his assets vested in the trustee, the trustee is entitled to the powers, rights and interests in East‑West UK. The court ordered Ms Helbet to transfer all her powers, rights and interests in East‑West UK to the claimant in his capacity as trustee in bankruptcy. The order followed findings on credibility, back‑dating of documents and adverse inferences from non‑attendance of key witnesses.