Undoubtedly one of the biggest stories to come out of the charity sector in the last few years was the collapse of Kids Company. This came just a month after it had received a £3m government grant backed by the then prime minister, David Cameron. Now, eight of the former directors of the charity, along with the former chief executive Camila Batmanghelidjh, face disqualification proceedings for their part in its financial mismanagement.  

According to a statement from the Insolvency Service, if the disqualification orders are granted, all nine ex-board members face a ban from holding any role in the running or control of a company for a period of between two and a half and six years.

Severe Consequences for Those Involved

Although the proceedings are civil rather than criminal in their nature, if successful, they could still have severe consequences for those involved. And, given the Insolvency Service’s success rates in similar public interest cases, the directors might be wise to expect the worst.

The effect of a disqualification order is not only to prevent an individual from holding a company directorship, but also from taking part in the management of any limited company in any way, no matter how small. Breaching the disqualification will almost certainly result in a custodial sentence. The ban will also force the ex-board members to relinquish any current directorships they hold.

Who are the ex-directors?

The next step in the process is for the Insolvency Service to file proceedings in the high court. These will name eight former directors: Francesca Mary Robinson, Jane Tyler, Andrew Webster, Erica Jane Bolton, Richard Gordon Handover, Vincent Gerald O’Brien, Sunetra Devi Atkinson and former BBC chief Alan Yentob.

Although the former chief executive Camila Batmanghelidjh was not formally a director at the time of the collapse, she will still face proceedings as a de facto director.  

The Reasons Behind the Charity’s Collapse

Kids Company staff had blamed the failure of the charity on a police investigation into alleged sexual and physical assaults within the charity. That investigation was subsequently dropped. However, a report by MPs found that it was the trustees of the organisation, under the influence of an “unaccountable and dominant” chief executive, that was the real reason for the charity’s demise.

There were also repeated claims of financial mismanagement throughout its history which had been repeatedly denied by Alan Yentob, the chair of trustees at the charity for 19 years.

What Happens Next?

In a case like this, the disqualification process is likely to be a lengthy one. The first step will be for the Insolvency Service to provide its evidence to the court. The directors will then have the opportunity to refute the evidence before a judge.

Alternatively, the directors could choose to provide a disqualification undertaking, which means they voluntarily accept the disqualification without having to go through the time and expense of a full hearing. In this case, they would still be responsible for the Insolvency Service’s costs and have the reasons for their disqualification published on the Insolvency Service’s website for a period of three months.