Expert Witness Journal Issue 65 February 2026 - Flipbook - Page 82
forged. In particular, forensic analysis uncovered
various inconsistencies in the documents provided
by Shift and Corja, including evidence that:
1.
2.
•
certain pages of the sole director’s resolution
(approving the warrant instruments) were
printed at di昀昀erent times;
certain pages of the warrant instruments had
been substituted for the originals;
3.
Ms Gregory did not write her manuscript printed
name on the second warrant instrument; and
4.
the signatures on the second warrant instrument
were executed around or after 1 January 2025,
not on 19 June 2024.
Taken with a “considerable volume” of evidence
of circumstances that made Mr Corlett’s account
extremely improbable, the Court held that it was
“impossible to accept that the documents are
probably genuine”.
•
Duties to creditors and the limits
of rati昀椀cation
Having disposed of the claim on the basis the
purported warrants were falsi昀椀ed, it was not
necessary to determine Yodel’s alternative case that
the warrants were void or voidable. However, in case
it was incorrect on the falsi昀椀cation of the warrants,
the court proceeded to assess that alternative
argument.
•
•
ɿ
Mr Corlett “did not even consider the
position of creditors as a body”; and
ɿ
Had Mr Corlett done so and nevertheless
decided to proceed with issuing the
warrants, that decision was manifestly not
in the creditors’ best interests as it would
likely have hindered the swift provision of
the sort of rescue 昀椀nance Yodel urgently
needed to continue to trade in the short
to medium term.
The Court also held that the purported
shareholder rati昀椀cation of the warrant
instruments could not cure breaches where the
creditor duty was engaged. In circumstances
of insolvency, where the value of the company
breaks in the creditors’ debts and shareholders
will be out of the money, shareholders cannot
ratify acts that exceed directors’ powers and
disregard creditors’ interests.
Speci昀椀c performance and
discretionary relief
The Court then considered, hypothetically, whether
speci昀椀c performance would have been granted if the
warrants were deemed valid. It concluded that such
relief would have been refused.
The Court con昀椀rmed that, under the Supreme
Court’s decision in BTI 2014 LLC v Sequana
SA [2022] UKSC 25; [2024] AC 211 (Sequana),
balance sheet insolvency can itself trigger the
duty on directors to consider creditors’ interests.
It should be noted, however, that in doing so
the Court recognised “that the burden of the
duty that exists is on a sliding scale”, being
calibrated to the risk of an insolvency process
that would be adverse to the creditors’ interests
on the facts. The duty to consider creditors’
interests in a successfully trading, but balance‑
sheet insolvent business with adequate funding
and unquestioned ability to pay its debts as they
fall due would exist, but would be lighter than
a balance‑sheet insolvent business facing a cash
昀氀ow crisis.
Shift and Corja would not have come to the court
with ‘clean hands’: they had knowingly concealed
the existence of the warrant instruments from Yodel
until six months after the sale (in which YDLGP as
seller, acting by Mr Corlett, warranted that there
were no such interests), and the existence of these
documents would have undermined Yodel’s newly
obtained funding, which had been provided on the
assumption that JLL was the sole shareholder.
Yodel’s articles of association (having been
amended in November 2024 without knowledge
of the warrants) provide that JLL’s prior written
consent is required for Yodel to allot shares. The
Court did not see any basis to imply a term that JLL’s
consent could not be unreasonably withheld and did
not have jurisdiction to require JLL to consent. The
Court concluded that it would not order Yodel to do
something that was unable to do, which would have
left Shift and Corja with claims for damages only.
Here, not only was Yodel balance sheet insolvent,
it remained “teetering on the brink” of cash
昀氀ow insolvency in June 2024: the company faced
immediate payroll, HMRC and rent liabilities,
all of which were underpinned by uncertain
funding that later failed to materialise. The
creditor duty was therefore strongly engaged.
EXPERT WITNESS JOURNAL
The Court held that, in issuing warrants
conferring a potential controlling stake at a
time of acute 昀椀nancial distress, without any
corresponding capital injection, Mr Corlett
acted in breach of the creditor duty as:
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