They took Badenoch, who made the decision as business secretary, to court and at a hearing in Belfast's high court the new Labour government said the refusal of £14,250 in funding was "unlawful", agreeing to release the money and pay Kneecap's costs.
One member of the band, DJ Próvaí, whose real name is JJ Ó Dochartaigh, arrived at court in a mock police Land Rover bearing a Palestinian and Irish flag and wearing his trademark tricolour balaclava.
To the mirth of people in court, Mr Justice Scoffield said he was happy to hear there had been a settlement, wishing all sides well with a cheerful "Go raibh maith agat", Irish for thank you.
DJ Próvaí told reporters that the case was "never about money" but about equality of expression for all sides in Northern Ireland, as guaranteed in the Good Friday agreement.
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