Art Collateral Sales. Avoiding the Pitfalls

The economic impact of Covid has undeniably arrived in the art market. A trickle of enquiries on managing the sale of art collateral has now evolved into multiple high value cases.

Whether you are a lender, borrower, lawyer or trustee it is in everyone’s interest that sale proceeds are
verifiably maximised. Here are 3 cast iron rules when selling distressed art assets in the current market:

•Do not roam the art market looking for options. The market will quickly lower valuations and expectations if the collection becomes widely known as a distressed sale. In addition, there are plenty of conflicted advisers, auction houses and dealers who will look to benefit from a distressed sale situation. Lenders should actively dissuade borrowers from driving the development of sale options – especially through “friends”.

•Slow down – the private sale market for exceptional works remains very robust, whereas the auction market for more standard works should be avoided if possible until buyers can travel to sales to view and bid on art (realistically after the summer).

•Applying a structured, discreet and professionally managed sale process ensures that all parties can have confidence that every effort has been made to maximise the outcome of a sale.

If you have a case that you would like to discuss, please contact:

Willem de Gier

Richard Bagnall-Smith

Cadell works with Private Client Lawyers, Family Offices, Banks, Trustees and their clients to help them navigate the conflicts of interest that are endemic in the art world. Cadell is the only art advisory firm to fall under FCA regulation. We provide conflict-free advice and (uniquely) never deal, broker or take introductory commissions. We have 25 of the most experienced sector art experts in the market and focus on managing art transactions. Our clients are mainly in London, Geneva, Zurich, Monaco, Jersey, Guernsey and Isle of Man.