Early last week the online auctioneer Paddle 8 filed for Chapter 11 bankruptcy in the Southern District of New York, on the heels of a recent lawsuit demanding payment for works of art sold at a charitable auction last November. While the Paddle 8 bankruptcy seems to have been driven by business conditions long before the complete upheaval of the art and business world due to COVID19, it is all but certain now that the cascading closures of businesses large and small for the foreseeable future will bring a wave of bankruptcies in the months and year to come. As such, taking a closer look at the Paddle 8 situation can be instructive for art market participants of all sorts, particularly with respect to the consignment and sale of art. Put simply, most businesses are going to need to think very soon about their roles as creditors who are owed some good or service, in the hopes of avoiding becoming debtors who need the help of bankruptcy laws to reorganize or stave off liquidation.
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Topics:
Bankruptcy,
Bankruptcy Code,
Bankruptcy Court,
consignor,
U.C.C.-1 statement,
New York Arts & Cultural Affairs Law,
Salander O'Reilly,
ArtNet,
Force majeure,
coronavirus,
COVID-19,
Chapter 11,
Paddle 8,
Auctionata AG,
online auction,
Tom Otterness,
Valentine Uhovski,
Rameshkumar Ganeshan,
11 U.S.C. § 541(b)(1),
11 U.S.C. § 362(a),
Penumbra,
G.L. c. 104A, § 2,
John Ahearn,
Kiki Smith,
Jonas Mekas,
Jim Jarmusch,
Walter Robinson,
Michael McClellan,
security interest,
N.Y. Arts & Cult. Affairs Law § 12.01,
automatic stay,
Acts of God,
Paper Chase
New York has passed an amendment to its Arts & Cultural Affairs law, N.Y. Arts & Cult. Aff. Law §12.01(2012), that is important for artist, galleries, and dealers alike. It affects the consignment relationship and creates critical new duties—and liabilities, for the dealer on consignment. Most importantly, it makes using any form of agreement drafted under the old law risky, particularly for the gallery or consignee. Signed by Governor Cuomo this week, the law takes effect November 6, 2012.
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Topics:
Legislation,
consignment,
attorneys' fees,
Collections,
breach of fiduciary duty,
Trusts,
Salander O'Reilly
