Back to Ganoksin | FAQ | Contact

Gallery Closed - Artists unpaid


#1

A popular crafts/glass/jewellery gallery has closed its doors after
9 years business here in New Zealand. It’s Gallery VC in Queenstown.
Artworks held at this gallery were on a sale or return basis, owned
by the artists until sold, at which time the gallery was to retain a
percentage as commission and to forward the remainder to the artists
by the 20th the month following.

They have now announced the gallery closure after months of
speculation on our (collective) part, and have written to artists
saying, ‘any sum remaining due can only be treated as an unsecured
creditor and it is very unlikely that any funds will be available for
distribution’

One of the two partners is selling a house and planning to leave the
area.

Now, I dispute this definition ‘creditor’ in the normal commercial
sense of the term. It wasn’t wholesale stock but consignment works. I
believe we are UNWITTING creditors at most.

The amount owing artists totals approx $150,000.

Has anyone else here had experience of such an event and can help
with advice?

Regards
Brian
B r i a n A d a m a n d R u t h B a i r d
518 South Titirangi Road Auckland NEW ZEALAND
www.adam.co.nz
www.adam.co.nz/ruthbaird
www.fingers.co.nz/artists.htm


#2
The amount owing artists totals approx $150,000. Has anyone else
here had experience of such an event and can help with advice? 

WOW! That’s a ton of money owed. If that gallery was doing so
well, why did it have to close? I own a gallery, and we make a
thousand a month (on good months) So, I don’t have a lot of sympathy . .
what went wrong???


#3

Hi Brian, I have had experiences with bankrupt accounts and
consignment items, but I don’t think you’ll like what I have to say.
First, did you get your unsold work back? If so, consider yourself
lucky and be thankful that the gallery owners were honorable enough
to return the work before closing their doors. Otherwise the items
would probably have been secured by the owners’ bank.

As for money owed for for goods sold, in the law’s eyes you ARE a
creditor. It could be different in NZ than in the States but I doubt
it. Once sold, consignment items are no different from purchased
items. You don’t own them any more and all you’re entitled to is
payment for them, which makes you just another creditor. I’m afraid
you’re out of luck. Sorry! I do sympathize – I’ve been there.

Beth


#4

Hallo Brian, Yes I have to say that I had a similar experience some
years ago. The owners of galleries in Melbourne and Adelaide did the
same thing, went on holiday to Israel, paid out the family members
for their supposed salaries etc, leaving 11 cents in the dollar for
the artists. This applied to exhibition work, as well as normal
consignment. I later heard that some of my pieces were sold at public
auction without my knowledge or consent. This has coloured my
dealings since then…no more consignment, unless I’m totally
convinced the gallery is honest. Jenny.

Jenny Gore Enamels
Adelaide, South Australia


#5

Hi there Sounds like they were “borrowing from Peter to pay Paul”!
which in my estimation is unethical…i’ve recently come onto a board
of a gallery I thought for years was the “cat’s meow” (lots of fun),
to discover a near-impossible situation: years of bad reputation
caused by gross mismanagement, and, because it’s a community gallery
with a municipality as the landlord, a municipality itself deciding
the gallery’s immediate future, and to boot, a previous bad practice
of not keeping careful track of commission monies! (they were used to
pay other bills first) things are so dim-looking that there isn’t
even director’s insurance (the previous board, which for the most
part left at the same time as I got on, never pursued it)

so…

I believe, in your case, they have breeched your contract! better
go after them before they leave the country.

Erhard.


#6

Brian, It’s not clear from your post (and maybe not clear from the
gallery) whether they are refusing to return your unsold works or
placing you in line as a creditor to collect money from works that
HAVE sold. I would expect those to be 2 pretty different things.

Being in the States, I’m not clear on NZ law. But it would be
logical to expect that you would have all of your unsold pieces
themselves returned as they are NOT the property of the gallery
(depending on how your contract reads, of course). Collecting on the
proceeds, however, sounds iffy at best, but is worth a try. Here in
the states there are different “classes” of creditors when a company
declares bankruptcy, and their priority is determined by law.

Definitely Get A Lawyer!

Best luck,
Karen Goeller
@Karen_Goeller


Handcrafted and Unique Artisan Jewelry


#7

Hi Brian,

Has anyone else here had experience of such an event and can help
with advice? 

Sorry to hear about the problem with the gallery!

If I were you, I’d contact an attorney familiar with commercial &
bankruptcy law (that’s what it’s called in the US). S/He’d be able to
advise you on your rights about ownership & being paid for items that
were sold.

Dave


#8

Hi Brian- I don’t know the letter of the law in NZ, but here in the
states I have encountered a similar situation in the past. After
talking to my attorney for all of three minutes, he advised me to
locate the owner, demand the return of my consignment merhandise
immediately, and failing the return of my merchandise take a warrant
for the gallery owner’s arrest. If anyone accepts merchandise on
consignment with an agreement for payment vs return, then reneges on
that agreement (meaning the items were not paid for or returned),
they are guilty of theft. After I took those steps, the gallery owner
"found" our agreement - I mailed her a copy, signed- and returned my
items.

Clyde Gilbert
Greenwood Studio


#9

Unfortunately, I’ve also had galleries close while my work was there
on consignment. Two closed and just took off with my work. In one
case, only a couple hundred dollars worth of beads. In the second
case, I lost about $4000 worth of gold pendants when a shop in the
Denver Merchandise Mart closed. No one has ever been able to tell me
where the owners went, so I could try to get money back from them. I
also had a gallery close and file for bankruptcy, resulting in 3 of
my platinum pieces being counted as their inventory and sold to pay
off creditors higher up the line from me.

All in all, I’ve lost pieces with a wholesale value of about $7000
due to gallery closures. I won’t do consignment again, unless it’s
with someone I’ve known for a long time.

Karen Hemmerle
Boulder, Colorado


#10

the property belongs to the artist and cannot be sold as credit,
they did not sell it and it is your property, that is the law in the
US, (I went to the Gallery speach at the SNAG conference) and you
should get your stuff back, that is the way it works in the states,
and i am sure that is the way in most other civilized countries, you
are entitled to your proprty, just like if they were leasing a car
that car could not go on the auction block, it is not their property,
they are only providing a medium for the property to get to the
customer, or like the railroad, if it went under would all the
property on the rails be put up for sale?

if they do not return it, report it as stolen and file a report with
the local police, after all the items are yours, it doesn’t matter
if it was the gallery owner who stole it. if you mechanic takes you
car for a joy ride, it can be considered stolen if it is not to help
him in fixing the car or as the case may be selling your jewelry.

Aaron A Tracy


#11
    The amount owing artists totals approx $150,000. WOW!  That's
a ton of money owed.  If that gallery was doing so well, why did it
have to close?  I own a gallery, and we make a thousand a month (on
good months) So, I don't have a lot of sympathy . .  what went
wrong??? 

Interesting point! If the gallery sold $150k they would have earned
$80k themselves, so why DID it close?

They’d recently attempted an outlet in Sydney, called Galley VC.
That’s what soaked up the funds. They underestimated how well they’d
do there. Plus it was (we found out much later) a Limited Liability
Company, so they freely used artists’ money there then closed the
shop and walked away from it. However none of the artists were
informed of this Ltd Co status!

I’d like to hear from any Sydneysiders about whether they have any
experiences of Gallery VC, 35 William Street, Paddington, Sydney.

So the estimation of $150k is spread over approx 20+ artists. And
it’s from sales spread out over several months. You see as a
consignment gallery they were able to fudge the sales dates, and move
a sale from one month over to another, meanwhile using the funds. So
when (for instance) an artist calls and says ‘please return my work
as over the last 3 months it has not sold’, their response was, ‘no
please leave it here as in fact actually just this month 7 pieces
sold and a payment is due to you on the 20th of next month’.

So they were in control of the ‘when’ of each sale.

Then when the promised payment did not materialize, with further
prompting for payment they would say well actually times are
difficult at the moment what with 9/11(!), SARS and so on, we don’t
think we can pay you this month.

THAT’S when we smelled the rat. They were apparently using artists’
moneys from consignment sales to run the gallery. Or for business
trips. When pressed about this they would say, ‘of course not! that’s
NOT the way we do business!’ When pointed out that in this one
admitted case of late payment that they were advocating it, they
claimed well yes but it’s an ISOLATED INCIDENT.

Other artists travelled down there especially to uplift their work
and demand payments, and many were greeted with tears and apologies
and sob-stories and pleas of ‘please leave the work here so we can
trade out of our dificulties’, and in one case at least the artist
left the work with them and relaxed the demand for payment. Only to
regret that back home the next day.

Remember the gallery owners were considered by a majority of artists
(ourselves included) to be friends and had been friends for some
years. We wanted to support them, and expected reciprocal
support/transparency over our payments.

As it turns out various artists were fed what amounts to an
orchestrated litany of misover several months, and it
wasn’t until they closed the gallery and said there’s no money for us
that we are getting legal representation and are hoping to threaten
bankruptcy and/or criminal proceedings.

Brian


#12

I have found this a very interesting tread and those of you that
were directly involved have my sympathy. A couple of things that I
have done to help prevent this sort of thing .

  1. I contacted my local artist support non-profit organization (
    Texas Accountants and Lawyers for the Arts) about a contract that
    would legally provide the artist with title for the goods until
    either returned or paid for. This allows the artist to file criminal
    theft charges on unreturned goods and provides for title security
    should the consignor file for bankruptcy or his assets be seized by
    the government. Title specifically remains the property of the
    artist until their return or payment in full.

  2. the second thing I do is I pull all of my work from every gallery
    every 6 months. I inform the gallery of this procedure going in and
    explain it is to do inventory ( which any retailer should
    understand) , clean the goods so they are fresh and new ( saves them
    the work load of cleaning as often), and to resupply sold items and
    redistribute unsold items to locations that are more apt to sell
    them. I also explain that I will be adding new items on the return
    of inventory to the gallery. So far not a single gallery has had a
    problem with this. I do make an effort to keep goods tagged that are
    returning to the same gallery and to do these returns during the
    gallery’s slow seasons. All in all this helps me track inventory,
    sales, sale trends in a gallery, and best it keeps any one gallery
    from getting to deep into my pocket by selling goods and not paying
    for them. They don’t have much choice when the goods are being
    returned. I have a real list of what has been sold and not just the
    Gallery’s word for it. If sales have been significant in the last 30
    days( a good indication of items sold and not paid for) I delay
    returning goods until I receive payment.

This procedure has worked so far for me. Hope it helps some of the
other people caught in the consignment dilemma. Frank Goss


#13
  the property belongs to the artist and cannot be sold as credit 

This is not true in all states. Some states (New Mexico is one)
have laws on the books that protect consigned art works, BUT … the
law in those states does not consider jewelry to be art! And it
doesn’t matter if your consignment contract specifically states that
the jewelry remains the property of the artist until sold.

In other states (like California) you are technically required to
file a Uniform Commercial Code Financing Statement listing all
consigned items, before those items are protected.

So investigate individual state laws before you take for granted
that your consigned jewelry pieces are safe from an account’s
creditors. I learned the hard way. [Caveat: The specific state laws
I cited above may have changed since the last time I had cause to
check them out.]

Beth


#14

Aaron, I suggest you discuss this with an attorney who specializes
in bankruptcy. What you say is NOT CORRECT,LEGALLY. David Barzilay,
Lord of the Rings


#15
  Interesting point! If the gallery sold $150k they would have
earned $80k themselves, so why DID it close? 

I was in a consignment gallery for more than 5 years. Every month, a
check would arrive, I would cash it without difficulty. The owners
expanded to three businesses within walking distance of one another.
The tiny consignment gallery, moved to the building next door, and
new display cases arrived . . .it was BEAUTIFUL!!! The “opening” of
the expanded gallery went well. Within three months all the
businesses closed. We came to find out that the owners were deeply
in debt to the bank (more than $400,000.00 US), the bank “called the
loan” because of delayed payments. An arrangement was made with the
bank that consignment artists work would be returned to the artists
and everything else would be included in the bankruptsy filing.

Perhaps, the owners of your consigning gallery were including
consignment artists work as assets??? And maybe that’s why all the artists
were burned?


#16
   Has anyone else here had experience of such an event and can
help with advice? 

Brian,

One problem is that replies to this thread from U.S. folks will
relate to their understanding of U.S. law. Your laws may differ, But
I’d wonder whether you are able to file a lawsuit against the owner
himself, attaching his personal assets (the house for sale), based on
charges of fraud, if he used your personal goods as collateral for
now-failed financing, or the like. I doubt you can get paid for work
already sold, if it’s only delayed payments. If you’ve got actual
work there, still held up, then perhaps you have recourse. But as I
say, your local laws may have no relationship to what we have here.
See an attorney.

cheers
Peter


#17

Thanks for all your replies. Yes different laws for different
countries, but given the similar sale-or-return situation exists I
hoped for some comparable legalities.

Yes we are a small group of 18 now with legal help. One of the first
things our solicitor did was lay a charge with the police, and they
were about to pull the gallery owners in for questioning. Using
artists monies from sales of work on consignment is pretty close to
theft whatever book you consult. Quite different from a normal
commercial creditor situation.

So plans are afoot. I’m quite sure they’ll ‘find’ the money. I hate
doing this as once I considered them among my friends. Oh well, I
guess I just grew up.

I’m going to discuss with others here to try to improve the
consignment gallery/store situation in NZ. Many are on a local email
list I run, and we can maybe share computer applications and
sales/payout procedures. One gallery I sell on consignment at
provides a stocklist every month there’s a sale. They are also now
considering providing a stocklist every month whether there’s a sale
or not. The app they use? MSExcel.

Brian

B r i a n A d a m
e y e g l a s s e s j e w e l l e r y
Auckland NEW ZEALAND
www.adam.co.nz


#18

hi brian it would be a good idea to have a web site specifically for
artist and about galleries. everyone can air the behaviour of
galleries- good or bad. the stays on the web site, until
the gallery clears its debts to the artists. in this way, strange
behaviour is ‘weeded out’ and gallery owners might straighten up
their payment modes. a web site for everyone to see what’s going on
in the business.

Jenny Gore Enamels
Adelaide, South Australia
Ph. +61 8 8386-2233
Fax +61 8 8386-0945
@jenny.gore