New Orleans Auction Galleries in Chapter 11

The Antiques Trade Gazette has an article on the April Chapter 11 bankruptcy filing by New Orleans Auction Galleries. The judge was informed NOAG required about $500,000 i norder to continue operations, and had total debt of $4 million. It largest creditor, Cakebread Art Antiques and Collectibles of Houston is reported to be owed $2 million. The judge also approved an order that all funds received by the auction house be disbursed into separate accounts, for company operating funds, funds from the sale of inventory pledged by the auctioneers to their bank as collateral for a loan, and one for funds generated by consignments.

As appraisers we typically recommend auction houses to our clients.  Over the past several years we have witnessed many regional houses struggle to keep their doors open.  It would be wise to research and perform an adequate amount of due dilligence on an auction prior to making a recommendation.

The Antiques Trade Gazette reports

Paying vendors ahead of all other creditors was considered central to keeping the business afloat. The argument successfully put forward by NOAG to the court was that: "By honouring [these contracts], the debtor will maintain normal relations with the consignors, maintain its reputation as one of the premier auction houses in the country, and ensure that the debtor continues to obtain its unique inventory from its network of consignors."

The judge agreed to sidestep the usual protocol in Chapter 11 cases and, on May 3, approved a financing arrangement that allows local firm Aschaffenburg Assets to loan $500,000 of the funds to enable the reorganisation to proceed and, say the auctioneer's lawyers, ensure all the vendors are paid in full.

To read the full ATG article, click HERE.

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