More Salander News & Art Title Insurance

Philip Boroff writing for Bloomberg has additional news on items from the Salander O'Rilley Gallery.  Christie's will auction 130lots of art on June 9th.  Salander admitted to stealing and defrauding clients and investors in his art gallery of over $100 million.  The courts have ordered Salander to pay restitution, and therefore property of his has been selling at auction, including some recent decorative arts at Stair Galleries. The Chirstie's sale includes a work by Flemish master Peter Paul Rubens and art from “the studio of El Greco”. The sale is expected to bring $2.5 million according to Christie's representatives.

The interesting aspect of the items is they are those unclaimed by creditors, and have each been covered by an art title insurance polciy issued by ARIS Title Insurance Corp. The title insurance will protect buyers from future claims of ownership of the art. Given the amount of legal questions, and claimed art as security, collateral and consignments, the art title insurance policy is an excellent idea to induce buyers to purchase, and to protect them from future claims.

Boroff reports

Proceeds will benefit people and businesses that filed claims in U.S. Bankruptcy Court, after the gallery on Manhattan’s Upper East Side filed for bankruptcy protection in November 2007.

In March, a year after he was arrested, proprietor Lawrence B. Salander pleaded guilty in New York State Supreme Court to grand larceny and fraud. Salander admitted that he sold artwork he didn’t own and kept the proceeds, collected money for fabricated art-related investment opportunities and sold more than 100 percent interest in single works.

The June 9 sale is of art that creditors haven’t claimed or for which claims have been resolved by bankruptcy court. Each artwork is covered by Art Title Protection Insurance, issued by New York-based ARIS Title Insurance Corp., which protects the buyer against “defective title,” or someone coming forward to claim ownership.

U.S. Bankruptcy Court in January approved a settlement between unsecured creditors and Bank of America Corp.’s First Republic unit that led to the auction. First Republic lent the gallery about $30 million starting in 2002.

Under the settlement, unsecured creditors will receive the first $2.5 million from the sale, minus back taxes the gallery owed. What the bank and unsecured creditors ultimately get is based on a complex formula and any sale tally.

To read the full article, click HERE.