When Antoine Moonen, a Toronto graphic designer, needed some extra cash earlier this year to pay some bills, he turned to a painting on his wall. Hanging there was an Andy Warhol original, which he bought six years ago — if sold, it would definitely fetch him some much-needed dough. He took the painting to Ritchies Auctioneers, a reputable auction house that had been matching art buyers with sellers for more than four decades. The Warhol was entered in a June auction and, as expected, it sold for big bucks — $10,000. Moonen was thrilled. Now he just had to wait 35 days for the cheque to arrive. But once the five weeks came and went, he started making calls to the auction house. After none were returned, he called police.
Moonen is still waiting to get paid, and he’s not the only one. The venerable Canadian auction house, which worked with Sotheby’s on some sales, reportedly owes art sellers $1.2 million for paintings sold in the June auction. However, it’s unclear if they’ll ever get their cash — on Oct. 26, an Ontario judge ordered Ritchies into bankruptcy, and it officially shut its doors. Beyond the $1.2 million, documents show the company owes money to securedcreditors Bank of Montreal and Fleet Street Financial, and more still to other unsecured creditors.
Ritchies’ demise — and the circumstances surrounding its closure — has shocked many in the art world. Kari Andersen, a managing partner at Toronto’s Valenart & Associates, says the company was an integral part of the community. Until the past few months, Ritchies’ reputation was solid. In 42 years of business, they were known to pay their sellers, and their seven-year partnership with Sotheby’s — the companies teamed up for a semi-annual Important Canadian Art sale — was a major coup for the business and Toronto’s art scene.
What went wrong? While art sales, in general, have been hurt by the recession, it’s become increasingly clear through court filings and various public statements that Ritchies was also racked by deep conflict between its majority owner, chairman and CEO Ira Hopmeyer, and the recently departed president and COO, Stephen Ranger and its ex-CFO Fraser Elliott. The trigger may have been a failed bid by Ranger, Elliott and others to buy the company from Hopmeyer earlier this year.
The first outward indicator of trouble was Elliott’s resignation in late June. Things escalated after the company missed a July 8 deadline to pay $750,000 to consignors in the last Important Canadian Art auction in May. Sotheby’s, which wouldn’t comment for this story, then pulled out of the partnership, saying in a statement that it was “extremely concerned to learn about this situation.” (Later, it reportedly paid the $750,000 owed to those May sale consignors.) Ranger then resigned in late July and, a few days later, the bulk of theRitchies’ staff was let go.
Since then, the finger-pointing has intensified. In a letter sent to unpaid consignors on Oct. 15, Fleet Street alleged (without offering any evidence) that unnamed senior officers of the company — but “not” Hopmeyer — made “fraudulent preference payments” amounting to more than $1.2 million. Ranger, however, told Canadian Business that Hopmeyer, who did not respond to interview requests, is responsible for Ritchies’ woes.
At this point, police are not investigating, no charges have been laid and nothing has been proven in court. But whoever is in the wrong, it matters little to out-of-pocket sellers like Moonen, who doubts he’ll ever see his money. “I’m gutted,” he says.
