Font Size: 
Heller Hopes Artworks Sale Will Fetch up to $1 Million to Pay Creditors
New York Law Journal
October 19, 2009
From the collection: Julie Speidel's "Magao," has an estimated value of $2,000 to $3,000.
Starting next month in New York, bankrupt law firm Heller Ehrman will sell off hundreds of artworks to repay a small portion of its debt.
The largely contemporary collection is expected to fetch between $610,000 and $1 million in a slow art market, according to bankruptcy papers and the auctioneer hired to conduct the sale.
The first of the pieces will go on sale at 1 p.m. on Nov. 10 at the 580 Madison Ave. offices of auctioneer Bonhams & Butterfields. That will be followed one week later by a sale in San Francisco and another in Los Angeles. Still more pieces will go on sale next year on the West Coast.
Among the at least 10 items on the block in New York will be works by Canadian painter Marcel Dzama, U.S. sculptor Julie Speidel and British painter John Monks. The pieces, which date from 2001, are expected to fetch a total of between $19,500 and $28,000.
Martin Gammon, director of business development for Bonhams, acknowledged the art will be going on the block at a time when "the art market is somewhat down from its highs of 2007." But he said he expected the Heller auctions to be successful.
"In this particular instance, the pieces are post-war and contemporary, which has seen some deflation, but most of that speculation took place at the very high-end of the marketplace, pieces that were selling for hundreds of millions of dollars," Gammon said. "This is all, I would say, very well selected and well curated material."
Peter Benvenutti, the chair of Heller Ehrman's dissolution committee who is now at Jones Day in San Francisco, said he expected the auction to generate "a small fraction of the original cost" of the art, which he said was substantially more than $1 million.
"The short of it is the timing of the sale is not driven by the art market. The timing of the sale is driven by the process in the dissolution and bankruptcy case," Benvenutti said.
Partners at Heller Ehrman voted to dissolve the firm in September 2008 and filed for bankruptcy that December in the U.S. District Court in San Francisco. Since then, the firm has been busy winding down in order to pay off creditors, including selling assets such as its art. The firm submitted a liquidation plan last week.
Heller listed $50 million to $100 million in liabilities when it filed for bankruptcy last year. According to last week's liquidation plan, $232 million in unsecured claims had been filed in the case.
The bulk of Heller's collection was in its West Coast offices, the firm said in a motion to sell its art in August filed in the bankruptcy proceedings. It had 1,050 photographs, prints, paintings and sculptures. Of those, 113 pieces were in New York and Washington, D.C.
Gammon said the pieces on sale next month "are some of the more valuable pieces" in the collection, but the "highest value" pieces will likely be prints by Roy Lichtenstein, Richard Serra and Richard Diebenkorn, among others, that will be sold in the spring.
According to the bankruptcy papers, Bonham appraised the entire collection as worth between $610,000 and $771,000 at auction. Gammon said in an interview that value was based on an initial review of thumbnails of the art. It will likely actually earn more than $1 million, he said.
"It's extraordinarily well presented and framed," Gammon said of the collection.
Bonhams will take a 9 percent commission for fine art and 20 percent for "intermediate" collections. Heller considered auctioning the art through Sotheby's, "but they were only interested in selling certain high-end pieces of the collections," Kyle Everett, a vice president at Heller's financial advisor, Development Specialists Inc., said in an August affidavit.
Only 105 of the firm's pieces qualify as "fine art," but that constitutes 70 percent of its value.
Gammon said his firm will sell large lots of items -- 400 to 600 pieces -- starting in February, with art going on display in its San Francisco galleries and a stand-alone catalog that will be available online.
A separate sale in May will focus on Heller's photographs and fine prints, Gammon said.
The bulk sales are intended to generate interest from more collectors for pieces by artists without much of a track record in the auction market.
"It also provides an opportunity for former attorneys and clients who know it to pick it up at a reasonable price," Gammon said.
Some art has already been sold outside of the auction process. The bankruptcy court last month approved the sale of 14 pieces of fine art previously in Heller's Hong Kong office to Winston & Strawn for $10,000.
Winston was one of the firms that had considered merging with Heller before its collapse. In November, it acquired Heller's China offices.
Art from another bankrupt law firm, Thelen, will eventually also be auctioned off, though nothing has been scheduled, said Peter Gilhuly, Thelen's bankruptcy lawyer at Latham & Watkins in Los Angeles. He estimated it would fetch $100,000, adding that "it is a nice collection but, as you know, the market is depressed."
