- Trial of directors’ disqualification claim against the trustees and CEO of the charity Kids Company (Re Keeping Kids Co)
- What are the practical implications of this case?
- What was the background?
- What did the court decide?
- De facto directorship
- Unsustainable business model
- Case details
Restructuring & Insolvency analysis: In the directors’ disqualification claim against the trustees and CEO of Kids Company, the official receiver alleged that the directors were unfit to be involved in the management of a company because they caused or allowed the charity to operate an unsustainable business model. After a ten-week hybrid trial, the court dismissed the claim against both the trustees and CEO. The judge held that it was more likely than not that the charity would have survived had it not been for the unfounded allegations of sexual abuse made on the day the charity received its £3m restructuring grant from the Cabinet Office. The judge found that Kids Company’s CEO, Camila Batmanghelidjh, was not a de facto director of the charity, despite the fact she was running the charity on a day-to-day basis. Due to concerns raised during the trial about a lack of balance in the official receiver’s investigation and presentation of the case, the judge made several recommendations as to how the Insolvency Service should proceed in future. Written by Catherine Doran, barrister at Radcliffe Chambers, who acted for some of the defendant directors in this case.
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