Kids Company: Who Rules?

• Published date: 19 October 2022
• Subject Matter: Corporate/Commercial Law, Charities & Non-Profits , Corporate and Company Law
• Law Firm: Maurice Turnor Gardner
• Author: Ms Jennifer Emms and Rosalind Hetherington

*P.C.B. 175 Keeping Kids Company, the charity founded by Camila Batmanghelidjh, which went into a high-profile liquidation in 2015, has been the subject of a Charity Commission report into the charity's administration and management. ¹ The conclusions of the report, published earlier this year, differ significantly from the conclusions drawn by the High Court after the culmination of a 10-week hearing in late 2020. ² This article considers the report and its key findings and compares them with the conclusions drawn by the High Court. In this article and its footnotes, in the interests of brevity, the Charity Commission report will be called the "CC Report" or "the Report" and the High Court judgment "Re KKC".

Background

The history of the charity has been rehearsed and repeated on numerous occasions in articles and commentary charting the rise and fall of the charity and the subsequent legal proceedings. In order to contextualise this article, a brief summary of the background is set out below.

The charity was put into voluntary insolvent liquidation in August 2015. In the same month, the Charity Commission opened a statutory inquiry under s.46 of the Charities Act 2011. The scope of the inquiry was to examine:

1. The administration, governance and financial management of the charity including concerns around allegations of inappropriate spending, breaches of financial controls and the conduct of the trustees and the CEO amid concerns about the future viability of the charity;
2. Any regulatory concerns arising from the investigation carried out by the Official Receiver as part of the liquidation process;
3. Whether or not the trustees had complied with and fulfilled their duties and responsibilities as trustees under charity law

In the same year the Official Receiver, pursuant to his statutory duties and following his appointment as liquidator of the charity, began his investigation into the charity. Both the Charity Commission and Official Receiver conducted interviews with each of

the trustees and the CEO, Ms Batmanghelidjh. Certain *P.C.B. 176 other senior employees were also interviewed. The Official Receiver had access to the books and records of the charity, which it reviewed, in part at least, in the course of his investigation.

The next key event was the announcement, in August 2017, that the Official Receiver had launched formal disqualification proceedings under s.6 of the Company Directors Disqualification Act (CDDA) 1986 against the trustees in office at the time of the charity's closure, one trustee who had resigned a few months beforehand, and the CEO. It was later confirmed that this inquiry had been placed on hold pending the outcome of the Official Receiver's attempt to disqualify the trustees and CEO. ³

The sole allegation made by the Official Receiver was that the trustees and...