Out-Law News 2 min. read

Insolvency Service begins disqualification proceedings against Kids Company directors


The Insolvency Service is seeking disqualification orders against eight former directors of failed charity Kids Company, along with former chief executive Camila Batmanghelidjh, it has announced.

If the orders are granted, all nine individuals could be disqualified from holding any role to do with the running or control of a company for periods of between two and a half and six years, according to a statement from the Insolvency Service. Director disqualifications run for a minimum of two and a maximum of 15 years.

Insolvency law expert Nick Pike of Pinsent Masons, the law firm behind Out-Law.com, stressed that the proceedings being brought by the Insolvency Service against the individuals were civil and not criminal in nature. However, they could have severe consequences for those affected, particularly given the Insolvency Service's success rate in similar proceedings, he said.

"The Insolvency Service will seek to use its disqualification powers where there is sufficient evidence in the public interest, and when it does it is usually successful," he said.

"The effect of a disqualification order is pretty draconian, as not only does it stop the individual from holding company directorships during the period of disqualification but also from taking part in any way in the management of any limited company business, however small. Breaching a disqualification order will almost certainly result in imprisonment," he said.

In a statement, the Insolvency Service said that its proceedings would name eight former directors of the charity, as well as Batmanghelidjh. Batmanghelidjh was not formally a director when Kids Company collapsed in August 2015, however the Insolvency Service intends to argue that she acted as a 'de facto' director and should therefore be held to account in the same way.

It named the other directors as Sunetra Devi Atkinson, Erica Jane Bolton, Richard Gordonn Handover, Vincent Gerald O'Brien, Francesca Mary Robinson, Jane Tyler, Andrew Webster and Alan Yentob.

Insolvency law expert Nick Pike said that the disqualification process was a lengthy one, which effectively took the form of a full civil trial in the High Court's Companies Court division. The Insolvency Service would now provide its evidence to the court, which the named individuals would then have the opportunity to refute before a hearing in front of a judge.

The former directors would also have the opportunity to provide the Insolvency Service with a disqualification undertaking, voluntarily accepting the disqualification period proposed by the Insolvency Service and avoiding the time and expense of a full trial, Pike said. However, they would still be required to pay the Insolvency Service's costs and the details of their disqualification, including the reasons, would still be published on the Insolvency Service's website for a period of three months.

The names of all disqualified directors are also publicly available from Companies House, along with a simplified version of the reason for disqualification and the name of the company in whose name they were acting when the misconduct occurred.

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