The Official Receiver v Atkinson & Ors

The Official Receiver v Atkinson & Ors

The court held that the Official Receiver failed to prove that the defendants' conduct amounted to unfitness under section 6 CDDA 1986. The Trustees acted honestly, exercised reasonable judgment in a difficult context, and were entitled to rely on assurances from government and donors. The business model was not inherently unsustainable, and the charity's collapse was caused by external events (unfounded allegations) rather than mismanagement. Camila Batmanghelidjh was not a de facto director, as she acted under Board supervision and did not participate in the corporate governing structure as a director. No disqualification orders were warranted.

Parties
Claimant: The Official Receiver; Defendant: Sunetra Atkinson (now Sunetra Sastry); Defendant: Camila Batmanghelidjh; Defendant: Erica Jane Bolton; Defendant: Richard Gordon Handover; Defendant: Vincent O’Brien; Defendant: Francesca Mary Robinson; Defendant: Jane Tyler; Defendant: Andrew Webster; Defendant: Alan Yentob
Jurisdiction
England and Wales
Judgment Date
12 February 2021
Procedural Posture
Directors Disqualification (insolvency) / Final Judgment After Full Trial
Outcome
Claim dismissed. No disqualification orders made against any defendant.
Legal Topics
Directors' Disqualification, De Facto Directors, Charity Governance, Insolvency Proceedings, Fiduciary Duties, Corporate Governance
Company Law Insolvency Law Charity Law Directors' Disqualification De Facto Directors Charity Governance Insolvency Proceedings Fiduciary Duties +1 more

Case Brief

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Parties

The Official Receiver

Claimant

Sunetra Atkinson (now Sunetra Sastry)

Defendant

Camila Batmanghelidjh

Defendant

Erica Jane Bolton

Defendant

Richard Gordon Handover

Defendant

Vincent O’Brien

Defendant

Francesca Mary Robinson

Defendant

Jane Tyler

Defendant

Andrew Webster

Defendant

Alan Yentob

Defendant

Procedural Posture

Directors Disqualification (insolvency) / Final Judgment After Full Trial

Legal Issues

  1. 1 Whether the defendants, as directors and CEO of Kids Company, should be disqualified under section 6 of the Company Directors Disqualification Act 1986 for unfitness in the management of an insolvent company.
  2. 2 Whether Camila Batmanghelidjh was a de facto director and thus subject to disqualification proceedings.
  3. 3 Whether the defendants caused or allowed Kids Company to operate an unsustainable business model, and if so, whether this amounted to unfitness.

Ratio Decidendi

The court held that the Official Receiver failed to prove that the defendants' conduct amounted to unfitness under section 6 CDDA 1986. The Trustees acted honestly, exercised reasonable judgment in a difficult context, and were entitled to rely on assurances from government and donors. The business model was not inherently unsustainable, and the charity's collapse was caused by external events (unfounded allegations) rather than mismanagement. Camila Batmanghelidjh was not a de facto director, as she acted under Board supervision and did not participate in the corporate governing structure as a director. No disqualification orders were warranted.

Court Disposition

Claim dismissed. No disqualification orders made against any defendant.

Orders

  • No order for disqualification under section 6 CDDA 1986.
  • No findings of unfitness against any defendant.