Kids Company: Government snatches back £900k grant

Dec 12, 2022

Kids Company collapsed in 2015 in the wake of false sexual abuse and safeguarding allegations, following a smear campaign alleging mismanagement which was hatched by senior Conservative figures and actioned by a politically motivated media. 

In the days before the charity was wound down, the government had provided a £3 million no-obligation grant to Kids Company, much to the chagrin of said MPs and government officials, for payment of critical debts and staff wages. When the charity collapsed and the Official Receivers Office took over liquidation proceedings, £1m of this grant remained unallocated.

In early December 2022 the government announced it had recovered nearly £900,000 from the liquidation of Kids Company assets – which comprised of the £1m of unallocated grant money. Not only does the subtext of this announcement reinforce the false narrative regarding how they charity was run by its trustees and why it failed, but it also leaves creditors significantly out of pocket.

Has the Official Receiver Overstepped its Authority?

This is a question that certainly needs to be asked.

The High Court judgment of Mrs Justice Falk, who presided over the rigorous 10-week trial in 2021, comprehensibly vindicated founder Camilla Batmanghelidjh and the trustees of any wrongdoing. In fact, it went as far as to praise the trustees and the “enormous dedication” of Camilla Batmangheidjh. And yet the Charity Commission report published in February of 2022 still emphasised a technical issue of ‘mismanagement’ and asserted that if the trustees had gathered adequate reserves, then Kids Company might not have collapsed in the teeth of false sexual abuse allegations. This conclusion was not only absurd, but frankly smacks of fear of offending the Government.

It also left the door open for the Official Receiver to take the current action, for reasons unexplained, of recouping the outstanding grant money rather than paying out the assets to creditors – many of whom are freelance professionals such as outreach workers and psychotherapists.

In our view this undistributed grant money should have been treated as an unsecured debt. Why then has the Official Receiver treated it as something else? Furthermore, we assert that the decision should have been referred to a Judge, and that by not doing so the Official Receiver has indeed overstepped its authority.

As pointed out previously, Mrs Justice Falk highlighted the negative implications of the Kids Company trial for the charitable sector, which depends on the generosity of skilled and experienced volunteers. She stated: “It is vital that the actions of public bodies do not have the effect of dissuading able and experienced individuals from becoming or remaining charity trustees”. Once again, it appears that by leaving creditors out of pocket the Government continues to erode public trust and investment when the need for a robust charity sector is greater than ever.

Will the big questions ever be answered?

Seven years after its collapse, Kids Company wrongly remains a byword for poor governance and mismanagement. When will the Government learn the lesson that in continuing to perpetuate this false narrative, the charity sector as a whole is weakened, and the supply of willing trustees diminished?

Will the Charity Commission accept the challenge to its finding brought by Camilla Batmanghelidjh? And will the forthcoming judicial review finally put an end to this inaccurate portrayal of Kids Company?

Will the Official Receiver explain why and how it has recouped this £900k of grant money? And finally, will creditors ever receive a penny, or will this grant simply make its way back into the Government coffers?

Image: Flickr user Garry Knight, CC BY-SA 2.0 <>, via Wikimedia Commons

Search Posts

Company and Commercial litigation

We act on behalf of large international enterprises, UK institutions, SMEs, and high net worth individuals across all aspects of company and commercial litigation.


Personal and Corporate Insolvency

An exacting field, insolvency cases require the very highest levels of precision and expertise. Our blended team guarantees superior results whatever the nature of the case.


Civil Fraud

The number of civil fraud cases heard in the courts has undergone a 50% rise in recent years.


Public Inquiries

Our specialist team have significant experience both of representing individuals, private organisations, campaigners, charitable organisations, and public bodies who find themselves under scrutiny, required to give evidence, or face the prospect of appearing at a hearing.