Yodel Delivery Network Limited v Jacob Corlett & Ors

A court may find serious allegations such as forgery proved on the balance of probabilities where the evidence, assessed cumulatively, is credible and compelling. Balance-sheet or cash-flow insolvency may trigger the creditor duty, whose weight increases with the risk of an insolvency process adverse to creditors. Where that duty has arisen, shareholders cannot ratify conduct that breaches it or authorise an excess of directors’ power affecting creditors. A company’s failure to maintain a contractual warrant register does not itself invalidate otherwise validly issued warrants. Specific performance will not be ordered where the company lacks constitutional power to issue the shares and the relevant shareholder’s consent is unavailable.

Yodel sought to resist counterclaims by Shift Global Holdings Ltd and Corja Holdings Ltd for specific performance of alleged warrants entitling them to more than 1.8 billion shares in Yodel. The warrants and certificates purportedly took effect shortly before YDLGP sold Yodel to Judge Logistics Ltd on 21 June 2024.

The principal issue was whether the Second Warrant Instrument, certificates and related resolutions had genuinely been created and executed before the sale. Yodel also advanced alternative arguments based on insolvency, directors’ duties, interpretation of the warrant conditions, failure to maintain a register and clean hands.

1. Counterclaims dismissed. The Second Warrant Instrument and Certificates were false instruments. The judge found that they had not been prepared or executed before 21 June 2024, and that Ms Gregory’s signatures were forged. The conclusion was reached on the balance of probabilities after assessing the documentary, handwriting, ink-dating and factual evidence cumulatively. The alleged execution account was contradicted by inconsistencies in paper, document form, metadata, signatures, subsequent conduct and disclosure failures.
2. Alternatively, if the instruments had been authentic, Yodel was balance-sheet insolvent and was at serious risk of cash-flow insolvency. Applying Sequana, either form of insolvency was sufficient to trigger the creditor duty, although the weight of that duty depended on the risk of an insolvency process adverse to creditors. On these facts the duty was strong and required primary, if not sole, regard to creditors’ interests.
3. Mr Corlett would have breached the creditor duty by authorising warrants that entrenched a controlling interest and made urgent rescue finance less likely. He also acted contrary to Yodel’s articles and breached the duty under Companies Act 2006, s.171. The shareholder resolution could not ratify those breaches while the creditor duty existed. The warrants would therefore have been void; alternatively, s.40 would not protect Shift or Corja, and the instrument would have been voidable under s.41.
4. The warrants would not have lapsed merely because the holders knew of the sale. The contractual reference to notice meant notice given by Yodel under the instrument, not mere knowledge of the Exercise Event. Failure to maintain the register likewise did not invalidate otherwise issued warrants, although the spreadsheet relied upon was not the contractual register.
5. Specific performance would also have been refused because Yodel’s amended articles required JLL’s prior written consent to allot shares, which had not been given and could not be compelled.