HP-2020-000016 - [2025] EWHC 1451 (Ch)

By September 2017 Singleton was not willing to commit to significant further spending for further stock or marketing. Mr Sivner and Mr Lazarus were trying to recoup Singleton’s loans from any funds received by Cabo, and were exploring options to extricate themselves from the business. On 20 September, without discussion with the Cabo founders, they had a meeting with the toy company Creata to discuss the possibility of Creata taking over production and international distribution of Worldeez, with an option to buy out the brand. When that offer was (some days later) communicated to the Cabo founders, they rejected it. Mr Cohen’s only explanation for this in his evidence was that he thought that they “wanted to cling on” to the product.

There was, nevertheless, by then no consensus between the Cabo founders and Singleton on how the Cabo business was going to be funded and managed going forward. This was apparent from a September 2017 document with notes prepared by Mr Michaelson and Mr Cohen for a meeting with Mr Sivner, setting out a litany of complaints by the Cabo founders regarding Singleton’s participation in the business. The comments in that document made clear that the Cabo founders blamed Singleton for mismanaging the distribution of Worldeez, and felt that Mr Sivner and Mr Lazarus were being unrealistic in their expectations of profitability, were charging Cabo for sums not previously agreed, and were being too pessimistic about the future of the product.

On 6 December 2017, Avrom Bishop, Singleton’s finance director, emailed Mr Cohen, informing him that Cabo’s balance stood at £700 and that any money coming in had been directed to Singleton. The Cabo founders nevertheless continued to explore options for the continuation of the Worldeez. In a WhatApp conversation with the Cabo founders, the Cabo licensing agent Russell Dever reported on discussions regarding a retailer rollout programme for 2018, including the launch of seasons two and three of the product. A new potential packaging design (with a tube rather than a globe) was discussed, and a sample presented at a meeting with Mr Sivner and Mr Lazarus in April 2018. Mr Singleton and Mr Lazarus were, however, by then no longer enthusiastic. Mr Lazarus said in his evidence that he had already started to lose interest by that point, and was focused on not losing further money. As he put it, “I was checked out of the project at this point”. He and Mr Sivner therefore decided not to invest further in Worldeez.

On 14 May 2018 Mr Bishop emailed the Cabo founders to say that Singleton was unwilling to put any further money into Cabo, that it would exercise a lien on the stock and bank account, and that Mr Sivner and Mr Lazarus would not have any further involvement in the company. That effectively marked the end of the Cabo founders’ relationship with Singleton. What the Cabo founders did not know at the time (and did not discover until later in the year) was that on 9 May 2018 Mr Sivner and Mr Lazarus’ other company Sinco had agreed a merchandising and licensing agreement with MGA, which entitled Sinco to sell LOL branded watches and jewellery. That was no doubt a trigger for the decision by Mr Sivner and Mr Lazarus to cut ties with Cabo.

On 12 July 2019, the Cabo founders agreed to pay Singleton £52,496.00 in full settlement of Singleton’s claimed outstanding debt to the company of £361,918.75, and Mr Sivner and Mr Lazarus sold their shares in Cabo to the Cabo founders for a total of £504. Mr Lazarus resigned as a Cabo director, and in his place Mrs Michaelson and Mr and Mrs Cohen were appointed as directors.