“Hollow” Cross-Undertakings and Operational-Control Injunctions:
A Commentary on Yodel Delivery Network Ltd v Corlett & Others [2025] EWCA Civ 1108

1. Introduction

The Court of Appeal’s decision in Yodel Delivery Network Ltd v Corlett & Ors is likely to become the leading English authority on two inter-locking topics:

• the weight to be attached to a claimant’s cross-undertaking in damages where the undertaking is of dubious value (“hollow undertakings”); and
• the circumstances in which shareholders (or would-be shareholders) can obtain interim injunctions that would, in effect, take day-to-day operational control away from a company’s directors pendente lite.

The appellants, Shift Global Holdings Ltd (“Shift”) and Corja Holdings Ltd (“Corja”), claimed the right—under a disputed 2024 warrant instrument—to become majority shareholders of Yodel Delivery Network Ltd (“Yodel”), a loss-making parcel-delivery business. They sought an interim injunction to stop Yodel implementing an InPost-funded “transformation plan” before trial of a preliminary issue on the validity of their warrants. The High Court refused the injunction. The Court of Appeal (Newey, Males and Moylan LJJ) dismissed the appeal, thereby refining how American Cyanamid principles apply to operational-control injunctions and re-emphasising the doctrine that a valueless cross-undertaking is, in itself, a ground to refuse interim relief.

2. Summary of the Judgment

The Court of Appeal upheld the Deputy High Court Judge’s refusal to grant the injunction, for three cumulative reasons:

1. Adequacy of Damages to the Claimants. Any delay-related loss suffered by Shift/Corja could be compensated in money, and InPost SA offered (on appeal) to guarantee Yodel’s liability.
2. Inadequacy of the Cross-Undertaking. Shift and (especially) asset-less Corja could not satisfy any award to Yodel if the injunction later proved unwarranted. The offered undertaking was “worthless”, no fortification was provided, and the Judge was entitled to treat that as fatal.
3. Balance of Convenience. Pausing a time-critical turnaround would inflict large, uncompensated losses on Yodel, risk insolvency, and force directors to cede commercial decisions to hostile parties. By contrast, refusing the injunction merely postponed Shift/Corja’s strategic plans until an expedited October 2025 trial.

The Court also clarified that the respondent to an injunction application does not bear a formal burden of proof to quantify loss before the applicant’s financial weakness can be considered. The fortification tests in PJSC National Trust Bank v Mints apply only when fortification is sought, not when the adequacy of the cross-undertaking is evaluated ab initio.

3. Detailed Analysis

3.1 Precedents Cited and Their Influence

• American Cyanamid Co v Ethicon Ltd [1975] AC 396 – Reaffirmed as the “lodestar” for interim injunctions. The Court of Appeal applied the familiar three-stage Cyanamid test—serious issue, adequacy of damages/cross-undertaking, balance of convenience—while adapting it to the unusual context of corporate-control relief.
• Morning Star [1979] FSR 113 and Olint [2009] 1 WLR 1405 – Cited for the proposition that an impecunious applicant’s undertaking may be insufficient.
• Allen v Jambo Holdings [1980] 1 WLR 1252 and Belize Alliance [2003] 1 WLR 2839 – Acknowledged that poverty alone is not fatal, but distinguished on the facts: Shift and Corja were not legally aided public-interest litigants and had chosen not to fortify.
• Energy Venture Partners v Malabu Oil [2015] 1 WLR 2309; PJSC National Trust Bank v Mints [2021] EWHC 1089 – Provided the modern criteria for ordering “fortification”. The Court of Appeal agreed with the Judge that Yodel had a “good arguable case” for fortification, reinforcing the notion that courts will not grant high-impact injunctions on the back of a hollow undertaking.
• Dilato Holdings v Learning Possibilities [2015] 2 BCLC 199 and Convoy Collateral v Broad Idea [2023] AC 389 – Relied on by the appellants to argue that broad, non-proprietary injunctions are permissible. The Court accepted jurisdiction existed but held that the discretion should not be exercised on these facts.

3.2 Court’s Legal Reasoning

1. Serious Issue. The Judge found—without criticism on appeal—that Yodel’s defences were arguable, so the Cyanamid threshold was met. The appeal focused on the next two Cyanamid limbs.
2. Adequacy of Damages to Shift/Corja.
   • InPost SA’s guarantee eliminated the “collectability” objection.
   • Loss flowing from a re-ordering of business strategy, while inconvenient, is monetisable (cf. Lord Diplock in Cyanamid: the claimant must show damages are inadequate).
   • The claimants’ preference for specific performance did not per se prove inadequacy.
3. Value of the Claimants’ Undertaking.
   • Shift’s assets were opaque; Corja had none. “No substance” was a finding of primary fact the appeal court would not disturb.
   • Failure to offer fortification, despite a direct challenge, confirmed the “hollow undertaking”.
   • The Court rejected the appellants’ submission that Yodel had to quantify its potential losses before the undertaking’s hollowness could disqualify the injunction.
4. Balance of Convenience.
   • The transformation plan was already in motion (“the status quo” in practical terms).
   • Stopping it risked irreversible damage: loss of peak-season revenue, customer flight, possible administration.
   • Granting the injunction would effectively transfer board-level control to hostile parties during a precarious restructuring—a step the Court regarded as going well beyond “maintaining”.
   • Conversely, denying the injunction simply deferred Shift/Corja’s majority influence by three months to an expedited trial.

3.3 Likely Impact of the Decision

Corporate Control Disputes. Parties seeking interim orders that intrude on managerial discretion will face a higher bar unless they can:

• demonstrate genuinely unquantifiable harm; and
• back their cross-undertaking with either fortification or unquestionable resources.

Hollow Undertakings Doctrine Elevated. The decision crystallises existing strand of authority into a clear rule: a demonstrably valueless undertaking is presumptively fatal to relief that might expose the respondent to serious trading losses. Applicants must now expect rigorous scrutiny and should proactively propose fortification.

Third-Party Guarantees. The Court’s acceptance of an InPost SA guarantee as curing collectability concerns encourages well-resourced minority shareholders or parent companies to step in, and signals that such guarantees will be taken seriously.

American Cyanamid Endures. Despite academic debate post-Convoy Collateral, the Court of Appeal reiterates that Cyanamid remains directly applicable even to “unusual” injunctions that seek to freeze managerial decisions rather than preserve property.

Strategic Litigation Tactics. Applicants who use interim injunctions as a tactic to pause a turnaround, pending a proprietary/share ownership claim, will need detailed evidence of irreparable harm and a fully costed alternative plan. Bare assertions that “we would run the business differently” will not suffice.

4. Complex Concepts Simplified

• Warrant Instrument: A contractual document giving its holder the right (but not obligation) to subscribe for new shares at a fixed price within a set time frame.
• Cross-Undertaking in Damages: A promise typically required from an applicant for an interim injunction, stating that if the injunction later proves unjustified, the applicant will compensate the respondent for losses caused by the injunction.
• Fortification: Security (cash, guarantee, bond) ordered by the court to “back” the cross-undertaking where there is doubt about the applicant’s ability to pay.
• EBITDA: Earnings Before Interest, Tax, Depreciation and Amortisation – a cash-flow proxy commonly used to measure trading performance.
• Balance of Convenience: The third stage of the Cyanamid test – the court weighs the risk of uncompensatable harm to each side if an injunction is granted or refused.
• Hollow Undertaking: Slang for a cross-undertaking that is practically worthless because the applicant lacks funds; courts treat such undertakings as offering no real protection to the respondent.

5. Conclusion

Yodel v Corlett does not revolutionise interim-injunction jurisprudence, but it re-calibrates key Cyanamid factors for the modern corporate context. The case teaches that:

1. An applicant for an injunction that would alter a company’s operational trajectory must come to court with more than arguable rights; it must provide robust financial assurances and a coherent alternate business plan.
2. Where the applicant’s cross-undertaking is worthless, the court is likely to refuse relief unless wholly exceptional factors dictate otherwise.
3. On the flip side, respondents can neutralise the “collectability” point by producing a solvent guarantor, as InPost did.
4. The Cyanamid framework remains flexible but alive; courts will still ask the classic questions, albeit with contemporary commercial realities in view.

Practitioners advising would-be shareholder activists, turnaround investors, or boards resisting disruptive injunctions should therefore treat Yodel v Corlett as essential reading. It underscores that injunctive relief is as much about practical, real-world risk allocation as it is about legal rights. A party armed with only paper promises but no purse will struggle to commandeer a company’s steering wheel before trial.