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Kids Company disqualification claim dismissed

In a judgment handed down on the 12 February following a 10 week trial, Falk J dismissed the Official Receiver’s claim for the disqualification of the former directors (“the Trustees”) of the well-known charity Kids Company, which went into liquidation in 2015.

The Official Receiver applied for the making of disqualification orders under the Company Directors Disqualification Act 1986 against all of the directors who had been in office at or shortly before the charity’s collapse, together with its Chief Executive Officer, Camila Batmanghelidjh, who was alleged to have been a de facto director. 

The Official Receiver’s case was based on a single allegation of unfitness, namely that the defendants caused and/ or allowed Kids Company to operate an unsustainable business model from no later than September 2013 until it went into insolvent liquidation, 22 months later.  Seven of the eight Trustees and Ms Batmanghelidjh contested the claim.  In her judgment, Falk J concluded that she was wholly satisfied that a disqualification order was not warranted against any of the Trustees.  The Judge went on to say that the public needed no protection from them; on the contrary, she had a good deal of respect for the care and commitment they showed in highly challenging circumstances and most charities would have been delighted to have available to them individuals with the abilities and experience of the Trustees.  The Judge also said that it was vital that the actions of public bodies did not have the effect of dissuading able and experienced individuals from becoming or remaining charity trustees.  The claim against Ms Batmanghelidjh was also dismissed on the basis that she had not been a de facto director and, even had she been, in all the circumstances a disqualification order against her would still not have been appropriate. 

The full judgment can be found here.

Andrew Westwood of Maitland Chambers acted for the Fifth Defendant, Mr O’Brien, at trial and throughout the proceedings, instructed by Maurice Turnor Gardner.