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The Trustees and chief executive of the charity ‘Kids Company’ have been cleared of running an unsustainable business by the High Court.
17th February 2021
The Official Receiver was appointed to wind up the charity in 2015 after a Safeguarding allegation made the charity collapse in the summer. Just before its collapse the charity had received a restructuring Grant of £3m from the government but they failed to secure match-funding.
Two years later the Official Receiver would begin disqualification proceedings against the charity. They argued that the trustees as directors, and the chief executive as a de-facto director, should be disqualified on the grounds that they were running an “unsustainable business model”, in particular over the period of September 2013 until its closure in August 2015
The case was heard this year and the judgement was handed down by Justice Falk. The court rules that the business was not “unsustainable in principle” though some parts were “high risk”
Falk said, “Kids Company grew substantially between 2012 and 2014” and “as at the 30th of November 2014, the second of the dates relied on by the Official Receiver, the directors reasonably believed that additional funding could be obtained from the government”
She also said that the charity’s restructuring plan could have been successful, if not for the accusations of sexual abuse being publicised on the same day that they received the government grant. The charity was later exonerated by the police. Falk said, “if not for these unfounded allegations… the charity would have survived”.
The judgement also concluded that Camila Batmanghelidjh, the chief executive and founder of Kids Company, was not a de-facto director. All of the trustees and Camila Batmanghelidjh were cleared of the accusations.
Kids Company has already been the subject of a parliamentary inquiry. The Public Administration and Constitutional Affairs Committee blamed trustees, ministers, and the Charity Commission for an “extraordinary catalogue of failures”. In response to this the government committed to greater scrutiny before awarding grants in the future.
The Charity Commission opened a statutory inquiry into what happened in 2015 but has not yet released its findings, as the work of the Insolvency Service takes precedence.
Attached here is a link to the full case if you wish to read further.
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