Chinese Collectors Continue to Default

I am not sure if it is buyers remorse or not, but Bloomberg is running an article again on Chinese collectors failing to pay for items purchased at auction.  According to the article some Jade purchased at auction in France is now being re-offered as the Chinese buyers failed to pay or only partially paid.

To combat the failure to pay auction houses have been asking for deposits on top lots (although in the Chinese art market it is hard to tell would could be a top lot based upon the estimate and the selling price), suing for non payment, and in some cases releasing the names of the offenders.  Sotheby's has seen 19 lots, totaling $22 million fail to close between 2008 and 2011.  They are now suing many collectors to collect, for hammer price, buyer’s premium, interest and costs.

The article also has a quote from fellow appraiser Victor Wiener.

Bloomberg reports

Sotheby’s (BID) introduced a requirement last April that bidders on premium lots (the definition varies) must pay a deposit of HK$1 million ($128,791) to participate.

Public records don’t necessarily show all the twists and turns of the auction business. The prices for some disputed works in Sotheby’s lawsuits are listed on Artnet.com, the widely used database, as if the transactions have been completed.

“People accept it as fact and trade on this info,” said Beverly Schreiber Jacoby, a New York-based art appraiser.

Sotheby’s filed a lawsuit seeking payment for “Self Portrait in the Yellow Mountains,” an ink scroll by 20th- century master Zhang Daqian, which fetched HK$46.6 million and was the top lot of its sale on Oct. 4, 2011. Another writ was for a 1968 abstract painting by Zao Wou-Ki which fetched $8.9 million the day before. The price is listed as the auction record for the artist on Artnet.

Disputed Lots

Sotheby’s in all disputed lots was seeking the hammer price, buyer’s premium, interest and costs. Efforts to reach the buyers for comment, through Sotheby’s, its lawyers and the China offices of Bloomberg were unsuccessful.

“The court of last resort is, literally, the courtroom,” said Victor Wiener, a New York-based art appraiser who has served as a witness in cases involving art sold at auction.

“It’s an international problem,” London-based dealer Roger Keverne said. “Some Chinese dealers are trying to sell things before they pay for them. We don’t know the full extent of it. The concern is that they can also be the under bidders. They push prices up. It isn’t a genuine market.”

Source: Bloomberg