Bloomberg has an interesting article on the sale of a Keith Haring work sold in May of 2017 for a record price for the artist of $6.5 million. The collector failed to pay, Sotheby's later sells the painting for $4.4 million and is now suing the buyer for the difference of $2.13 million.
An interesting situation. The buyer claims Sotheby's backed out of a payment plan, and also did not try to maximize the sale of the painting.
There is also an interesting look from the perspective of an appraisal. According to the article the Haring sold in 2016 at Art Basel Miami Beach by the Dominique Levy Gallery and was offered for $3.9 million. It later sells in May of 2017 (5 months later) for $6.5 million at auction, and then private placed by Sotheby's for $4.4 million. Showing that auction prices in certain circumstances for important works can certainly out perform gallery pricing.
Bloomberg reports
Source: Bloomberg
- Record $6.5 million price for Keith Haring work is in dispute
- Collector says auction house backed out of payment plan deal
You can’t walk away from a winning bid.
That’s Sotheby’s message to a New York art collector who allegedly refused to honor his $6.5 million offer for an untitled 1982 Keith Haring painting, a record price for the beloved American pop artist.
The auction house sued Anatole Shagalov in August for $2.13 million -- the difference between his winning bid at the May 2017 auction and the price Sotheby’s got for the work after it was forced to resell it.
All sides agree that the large acrylic-on-vinyl painting, depicting Haring’s trademark "radiant baby" figure surrounded by stylized angels and barking dogs, attracted four bidders, with Shagalov coming out on top. What happened after that -- and before -- is being hotly debated in New York state court in Manhattan.
A hearing is set for Tuesday, with Sotheby’s claims about falsified evidence expected to take center stage.
Sotheby’s argues it’s a cut-and-dry case of a collector who overextended himself in the murkier end of the art-finance world. Shagalov, 49, contends Sotheby’s agreed before the auction to let him pay for the work in installments, and then demanded the money all at once. He also says Sotheby’s failed to make a "commercially reasonable" effort to get a higher price when it later sold the work for $4.4 million.
Sotheby’s attorney, New York litigator John Cahill, says Shagalov’s claim about an installment plan is hogwash.
"Sotheby’s occasionally gives installment payment plans but it does that in writing and it requires the installment payments to be made," Cahill said in a phone call. "There is nothing in writing and he never made any payments."
Shagalov’s attorney, Mathew Hoffman, said the dispute over installment payments isn’t the heart of Shagalov’s defense anyway. Instead, the lawyer said, the strongest defenses must be kept secret for now because they relate to documents filed under seal and can’t be explained or even summarized.
"There are all sorts of factors," Hoffman said in an interview. The payment plan "is a fairly minor point."
Two months after Sotheby’s sued, Shagalov says he found a potential buyer for the Haring work on his own -- Marco Mercanti, founder of the Madrid-based art firm Oblyon. Mercanti conditionally agreed to pay $5 million through a financing agreement with JPMorgan Chase & Co., according to court papers. Shagalov says that offer -- memorialized in an October letter filed in court -- is evidence that Sotheby’s failed to get the best possible price on the resale.
Undermined Sale
But the auction house says it made full use of its access to the global art market when it sought the best price. It blamed Shagalov for undermining the sale.
"With the work having been defaulted on and Mr. Shagalov having both shopped it around and driven the price up without having funds to pay it, Sotheby’s got a good price for it, well within its estimates," Cahill said.
Mercanti, who isn’t involved in the case, didn’t return requests for comment.
In October, the dispute over Mercanti’s offer ensnared Melissa Barbagallo, his North American head of sales. According to her sworn affidavit, when Shagalov pitched the Haring work to her, he asked for a backdated letter of interest.
She said Shagalov didn’t tell her he’d been sued for failing to pay for the painting or that the work was to be resold. According to the defense, that’s not true and doesn’t matter anyway.
"Whether she knew about the litigation or not is an irrelevant fact," Shagalov’s other attorney, Jason Cohen, said.
The painting was sold in December 2016 at Art Basel Miami Beach by the Dominique Levy Gallery, where it was offered at $3.9 million. It appeared at Sotheby’s auction the following May, estimated at $4 million to $6 million in the kind of quick turnaround that’s generally frowned upon in the fine art industry.
Shagalov’s business, based in Great Neck, New York, is "always the same, which is borrow money, buy art, sell art, pay loans back," his attorney, Hoffman, said at a Jan. 9 hearing, according to a transcript. “This was an ordinary course of business transaction for him.”
Justice Charles Ramos said at the time that describing the transactions as "ordinary" for the art world was "kind of like an oxymoron."
“This is not a nice business. This is not banking. This is not insurance," Ramos said about the industry. “I’ve seen brokers sell the same work of art three times and a work of art they didn’t own.”
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