Christie’s has defended itself in regards to claims that it sold a Korean gallery’s painting for less than it was worth as part of a sweetheart deal, saying it acted to settle a loan it had made reasonable efforts to settle.
Korean gallery One and J filed on Jan. 2 for a preliminary injunction with the New York County Supreme Court over the former’s sale of a painting by Francis Bacon in a private deal at what the Korean gallery claimed was a “bargain price.”
The two parties had remained silent since then.
In an email response to The Korea Herald and the Herald Business, Lavina Chan, Christie’s head of corporate communications for Asia, said, “Christie’s believes it has acted in accordance with its obligations under the UCC and its agreements with the Plaintiff.”
(Christie's official website)
According to the Seoul-based gallery’s petition, Christie’s had agreed in 2017 to arrange “a private sale of the painting that would net the gallery at least $10 million.” At the same time, Christie’s agreed to loan around $4.9 million to the gallery with the Bacon as collateral.
However, in September 2018, Christie’s informed the gallery that it had defaulted on the loan and that the former was entitled to sell the Bacon painting “under any terms, at any time, as we see fit,” according to the petition. Two weeks later, Christie’s told the gallery it had sold the painting at what One and J calls “fraction of the Painting’s fair-market value.”
According to the petition, the Korean gallery argues that Christie’s violated the Uniform Commercial Code -- a set of laws regulating sales of personal property and other business transactions -- by selling Bacon’s work in a “commercially unreasonable manner.”
One and J had attempted to avoid the “fire sale” of the painting by offering $6.8 million to Christie’s. However, the latter rejected the proposal, which the gallery found “unreasonable” according to the petition.
The Korean gallery claims in its petition that details of the sale suggest that Christie’s buyer was “a valued or prospective Christie’s client who planned to participate in Christie’s fall auctions, and that Christie’s agreed to sell the painting as part of a larger ‘sweetheart deal’ for that unknown buyer.”
However, Chan said that “Christie’s attempted to resolve this matter after years of non-payment. In good faith, Christie’s offered the Plaintiff an agreement to satisfy the long-term debt owed to Christie’s.”
“Unfortunately, the Plaintiff defaulted on multiple interest payments and was in breach of the agreed contract. Despite our best efforts to settle the matter with the Plaintiff, the collateralized painting was sold in order to collect on the amount owed.”
Seoul-based gallery One and J declined to comment on the current case, saying that the person in charge was currently on a business trip and would not return to Seoul for two weeks.
By Shim Woo-hyun (email@example.com