The NSW government has signalled its support for courtroom examinations of directors of the failed Guardian Youth Care charity, including former Wallaby Glen Ella, amid claims $20 million was misappropriated.

Guardian Youth Care collapsed in June after receiving more than $6 million in taxpayer funds each year to care for children with high needs and dangerous behaviour in group homes across Western Sydney.

Former Wallaby player and chief executive of Guardian Youth Care Glen Ella leaves his home. Credit:Kate Geraghty

The Department of Family and Community Services stands as the not-for-profit's largest creditor, claiming it is owed $19.6 million paid by the charity to related entities in unauthorised subcontracts.

A Fairfax Media investigation in June questioned the company's solvency and examined a series of unusual loans to these related entities, some of which were owned and run by former criminals.