Emigrant Bank Fine Art Finance, LLC, and art dealer Asher Edelman, a former Wall Street financier, are locked in a legal dispute over the terms and repayment of a multimillion-dollar loan.
NEW YORK—Emigrant Bank Fine Art Finance, LLC, and art dealer Asher Edelman, a former Wall Street financier, are locked in a legal dispute over the terms and repayment of a multimillion-dollar loan. Each side has filed separate lawsuits in New York State Supreme Court.
Last March, Emigrant, claiming Edelman had defaulted, sought summary judgment against him, seeking delivery of all collateral (much of which is in the form of artworks by the likes of Frank Stella, Michaux and Alberto Giacometti), cash, assets and an accounting of the collateral on the loans, according to court documents.
The bank’s court filings note: “Emigrant established both that Mr. Edelman is in severe financial difficulty and . . . has a history . . . [of] recklessness with Emigrant’s collateral, such that, absent the requested injunction, it is likely that any judgment against Edelman would be uncollectible.”
Among the evidence the bank cites in its arguments are: Edelman’s “repeated failures to make payments when due; his refusal to deliver complete financial statements as of December 31, 2009 by March 1, 2010, as required by the loan documents; his abandonment of his Paris apartment and 63rd Street gallery space . . . ; and his own admission, in a CNN interview, that he might be forced out of business due to a sluggish economy.”
Although much of the detail concerning the actual artworks pledged as collateral has been redacted from records made public on the New York State Supreme Court online records site, Emigrant’s complaint notes it is seeking “relief with respect to two Michaux paintings Edelman ‘loaned’ to a friend (notably without authorization from or notice to Emigrant).” According to its filing, “a significant percentage of the value of the collateral at Edelman’s residence is contained in seventeen (17) pieces.” However, the filing does not identify those pieces.
In a separate affidavit, also filed in March, Emigrant senior banker Hope Tate claimed that “Emigrant learned of Edelman’s consignment of collateral to Sotheby’s after Edelman had already executed the original consignment agreement with Sotheby’s.” This constituted a “violation of the security agreements,” the affidavit asserted.
Court documents also reference “two Frank Stella works” against which the bank filed Uniform Commercial Code financing statements. (These are filed by lenders on a state-by-state basis as a way of recording and protecting security interests in collateral offered by a debtor for a loan.) Regarding the Stellas, the bank says Edelman “falsely claims that Emigrant fraudulently procured security interests in two Frank Stella works that he claimed his ex-wife held priority to.”
The bank states in its filing, “contrary to Edelman’s assertion, Emigrant understood that Edelman’s ex-wife had a first priority lien on the works and [the bank] was completely forthcoming in accepting a junior position.”
On June 18, Edelman filed a complaint against Emigrant, its president, Andrew Augenblick and Tate, charging that they engaged in misconduct with respect to the loan total of $4.5 million. Edelman alleges that the bank has charged him and other borrowers “excessive fees and costs … where not legally permissible,” has created “unavoidable default circumstances,” and has taken “undue advantage of customers,” according to his complaint.
Edelman told ARTnewsletter he has repaid a total of $4.5million, but he and the bank differ on the amount of an outstanding balance. He added, “either they now owe me $200,000 or I may owe them up to $300,000. We have petitioned the court to decide a number.”
Edelman alleges that the bank changed the terms of his loan, to his detriment, in an attempt to make its financial situation appear stronger than it is. His complaint states that Tate informed him that the bank “had suffered extensive losses on account of substantial investments it or its principal, Howard Milstein, had made in Wachovia and Lehman Brothers.”
Edelman’s suit also claims that Tate and Augenblick presented “false and misleading” information in order to convince him to sign certain agreements related to his loans. Bank spokesperson Charles V. Zehren told ARTnewsletter that Edelman’s allegations are “completely baseless”; the bank “seeks only to hold Mr. Edelman to agreements he has made and for him to honor all of his obligations.”
Edelman told ARTnewsletter he would be willing to put $1million in an escrow account pending a decision from a judge stating how much he owes the bank.