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Judge Shutters Salander-O’Reilly As Gallery’s Legal Woes Mount

Salander-O’Reilly Galleries has been closed and barred from doing any further business as creditors, clients and investors seek the return of upwards of $80 million worth of artworks and funds they claim are owed.

NEW YORK—Salander-O’Reilly Galleries has been closed and barred from doing any further business as creditors, clients and investors seek the return of upwards of $80 million worth of artworks and funds they claim are owed.

Edwin Larkin of Winston & Strawn, one of the attorneys representing the gallery and its owner Lawrence Salander, told ARTnewsletter that his client and the various plaintiffs are currently attempting “some type of financial workout—either with the agreement of all creditors under the auspices of the bankruptcy court or a global settlement” of all claims.

Salander and the gallery are facing more than a dozen lawsuits from litigants who claim, among other things, that consigned artworks were sold without their knowledge or consent and, further, that Salander has kept some or all of the proceeds from those sales.

One collector, who was storing artworks at the gallery, asserts that Salander sold about $3.5 million of art without her permission or knowledge. She has not received any of the funds from the sales, her complaint states.

After a hearing with dozens of claimants in New York State Supreme Court on Oct. 19, Judge Richard B. Lowe III granted an attorney’s request to change the locks on the gallery in order to prevent Salander from further accessing any of the artworks presently in dispute. According to the ruling: “No person shall enter into the Gallery without the express permission” of Lowe.

The judge also ordered “a complete inventory of all art at the gallery.” On Monday, Oct. 22, Lowe toured the gallery, located on Manhattan’s Upper East Side, with attorneys including Barry Slotnick of Buchanan Ingersoll & Rooney. Slotnick is representing one of the largest claimants, Renaissance Art Investors, which is controlled by Donald Schupak, chairman of Triumph Apparel Company (formerly Danskin).

In a complaint brought against Salander-O’Reilly in late September, Schupak seeks as much as $22.5 million for property and funds related to a consignment agreement with the gallery.

At the Oct. 19 hearing, Slotnick expressed concern that Salander-O’Reilly might have sent some works to Italy for sale. This convinced Judge Lowe to extend the order prohibiting Salander from accessing artworks to cover various holdings around the world.

Dean Nicyper of Flemming Zulack Williamson Zauderer, the attorney representing Earl Davis, son of painter Stuart Davis, told ARTnewsletter the Friday hearing made it clear there are numerous claims “potentially to the same property.” Davis charges he is owed approximately $30 million for about 100 works painted by his father that he contends the gallery either has held or else sold without his permission (ANL, 9/18/07, pp. 7-8).

Of these, Davis believes perhaps as many as 70 were sold for about $9.5 million. The whereabouts of the remaining 25 or so works are unknown, Nicyper says. Through their own efforts, Nicyper adds, he and Davis were able to locate and recover some of the paintings in question: Several were returned from a different Manhattan gallery; another was returned to Davis by a restorer who said Salander had given it to him in lieu of payment, court documents maintain.

On Oct. 17—as the gallery was preparing to unveil a major show, “Masterpieces of Art: Five Centuries of Painting and Sculpture,” including works by Botticelli, Caravaggio, Goya and Pontormo—Whitfield Fine Art, London, withdrew the works it had gathered and supplied to the show after learning that the gallery had been served with two restraining orders.

Artworks were carried out of the gallery as security guards stood watch and the event was videotaped. Whitfield issued a statement emphasizing that “it has no part in the recent and ongoing legal actions against Salander-O’Reilly Galleries.”

Furthermore, Whitfield said, the centerpiece of the show, Apollo the Lute Player—described as a Caravaggio, which the London gallery was responsible for supplying to the show—“is not owned by Salander-O’Reilly Galleries, nor is it for sale.”

Salander had been quoted in two press reports as saying that the painting carried a price tag of “$100 million,” which he called “cheap.”

Whitfield Fine Art spokeswoman Sue Bond told ARTnewsletter the painting had never been intended for sale as part of the show, adding that it is currently “owned by a private collector.” The work had been sold at Sotheby’s for $110,000 in 2001; after restoration it was attributed to Caravaggio, instead of the “circle of Caravaggio.”

Hedge-fund investor Roy Lennox, who is suing Salander-O’Reilly for $4.6 million for “breach of contract, unjust enrichment . . . and fraud,” among other charges, filed a motion for sanctions and contempt on Oct. 10, seeking the return of “a painting, entitled Bullfight, by Goya.” His attorney Howard Rubin of Davis & Gilbert declined to comment.

The Indianapolis Museum of Art was among the various parties seeking return of artwork. Director Maxwell Anderson told ARTnewsletter the museum had recently loaned the now-canceled Salander-O’Reilly exhibition a painting, Sleeping Cupid, circa 1595-96, that is “attributed to Caravaggio.” The museum is expecting the return of the painting, as directed by the judge.

“We don’t routinely lend to gallery exhibitions,” Anderson says. “Our purpose in lending it was to have the work examined alongside other examples” of Caravaggio’s work.

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