The National Citizen Service Trust (NCS Trust) has agreed to pay £2.8m to The Challenge after an agreement was reached to resolve their recent high profile dispute.
The Challenge, a registered charity, went into administration last year after losing its contract with the NCS Trust to deliver the National Citizen Service youth social action programme. Shortly before going into administration, The Challenge filed a High Court claim against NCS Trust for around £20m.
A statement, which has been issued by the NCS Trust, states: “The parties have agreed mutually acceptable terms of settlement which resolve all outstanding issues between them.”
It says: “Without any admission of liability, NCS Trust has agreed to pay a sum of £2.8m in respect of costs incurred by The Challenge for unfilled places during 2019 which can be claimed under the contract. NCS Trust has accepted no liability in respect of the other two parts of the £26m claim brought by The Challenge.”
The payment was authorised by the Department for Digital, Culture, Media and Sport and HM Treasury. It was negotiated with Phillip Sykes of RSM Restructuring Advisory LLP as joint administrator on behalf of the creditors of The Challenge.
According to documents filed with Companies House by the charity’s administrators, The Challenge owed £7.9m to unsecured creditors and almost £1.3m in redundancy payments, as of February of this year.
The NCS youth programme was launched by the government in 2010. It was overseen by a community interest company until being transferred to a new royal charter body, the NCS Trust, last year.
The Challenge had been heavily involved in delivering the programme since the beginning. It was the largest provider and had put 250,000 young people through NCS since 2009, while employing over 500 permanent staff.
The dispute between the two organisations centred on a requirement for all NCS Trust's delivery partners to use the same IT system.