Kids Company trustees successfully resist disqualification claim

Catherine Doran, led by George Bompas QC, acted for 5 of the former trustees of Kids Company, including its chairman Alan Yentob.

The charity went into insolvency in 2015 after what turned out to be unfounded allegations of sexual abuse hit the press on the day that the Cabinet Office made a £3 million grant to enable the charity to restructure. The Official Receiver sought to disqualify 8 former trustees as well as the CEO, Camila Batmanghelidjh, on the basis that they caused or allowed the charity to operate an unsustainable business model. The case was closely followed by the charity sector, as there was concern that disqualifying volunteer trustees would be a deterrent to those taking on the burden of trusteeship, in particular where there was no allegation of want of probity, and the covid pandemic having brought many charities to the brink of insolvency.

A 10 week hybrid trial took place in one of the Rolls Building’s biggest courtrooms between October and December 2020, with proceedings broadcast to the next courtroom to enable the press and public to watch. On 12 February 2021 judgment was handed down. Mrs Justice Falk dismissed the disqualification claim against the trustees and Ms Batmanghelidjh.

The result was a resounding victory for the trustees, with the judge commenting:

I remind myself that the primary purpose of the jurisdiction under s 6 CDDA is to protect the public. The public need no protection from these Trustees. On the contrary, this is a group of highly impressive and dedicated individuals who selflessly gave enormous amounts of their time to what was clearly a highly challenging trusteeship. I have a great deal of respect for the care and commitment they showed, and the fact that they did not take the much easier path of not getting involved in the first place or walking away when things got difficult.

After a detailed consideration of the authorities, Mrs Justice Falk held that Ms Batmanghelidjh was not a de facto director of Kids Company, as had been alleged.

The judge was critical of the way the case had been pursued and presented by the Insolvency Service. Her judgment included a number of recommendations for improvement.

A link to the judgment and press summary is here.