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Finarte closes its doors over spiralling debts

11 July 2011Written by ATG Reporter

SPIRALLING debts and a lack of prospects have forced the closure of Finarte Casa d’Aste S.p.A., formerly a major player in the Italian auctions scene.

The closure follows net losses of €4m in 2010. On June 30, shareholders voted to put the company into liquidation, ending several years of tribulation.

Finarte was founded in 1959 with the intention of providing a service which banks at the time would not: accepting art as collateral for loans and helping to create portfolios of art for companies.

Throughout the 1980s and 1990s, it was one of, if not the, most important auction house in Italy under the chairmanship of Casimiro Porro, and seen as the Italian response to the anglo-sassoni Sotheby's and Christie's, with a regular selection of high-profile, high-ticket auctions.

In 1986, for instance, it sold Giuseppe Pellizza da Volpedo's Fiumana for 1.2bn lire to a finance company that subsequently donated this iconic work to the Brera museum in Milan.

In 1990, the company was floated on the stock exchange as the good times continued to roll. However, the start of the new century also marked the start of problems.

In 2001, Porro left the company in the wake of a power struggle that saw the company taken over by Giorgio Corbelli, owner of Telemarket, an online and TV art sales company, former Napoli football club boss and habitué of the courtroom, which has seen him sentenced to a term in jail in at least one case.

His takeover was marked by a spending spree, including the purchase of the Abbey of San Gregorio in Venice and the hostile takeover of the Venetian auction house, Semenzato, in 2002. Both Semenzato and Porro subsequently set up their own auction houses: Porro still holds regular sales, while Semenzato closed down last year with debts of €15m.

By now, there were too many fish in a shrinking pond: save in the field of contemporary art, the Italian art market remains largely isolated due to the heritage laws dating back to the Fascist regime that make it laborious or impossible to export art.

Moreover, this was a pond in which the north European auctioneers, with their global reach, were becoming increasingly active: Sotheby's, Christie's, Dorotheum and Bloomsbury all cranked up their activities in Italy in the 2000s. And the home-grown auctioneers, with niche specialities and lower costs, such as Wannenes, Pandolfini and Meeting Art, were also providing strong competition.

Having over-stretched itself financially, Finarte now saw the number and value of lots consigned for sale declining: from 52 sales to 35 between 2005 and 2009, with turnover falling from €48.5m to €27.7m in the same period.

By 2010, sales were down to 24, with modern and contemporary art accounting for 35 per cent of turnover. By now, Finarte was Italy's fifth auctioneer in terms of annual sales totals. It was at about this time that Finarte chose no longer to publish its sales results.

Moreover, it began selling some of the works of art in its ownership at auction, with unsold lots being subsequently offered through the Telemarket channel (see report here), and more expensive Old Masters through a gallery it opened in Cortina d'Ampezzo, a fashionable ski resort.

In June 2010, Finarte revealed losses of €2.5m for the first six months and was obliged by law to reconstitute its company capital. However, despite approval from shareholders, little money was forthcoming and in August trading in its shares was suspended on the Italian stock exchange.

Despite some drastic cost-cutting and shedding of more assets, the woes increased: in the first three months of 2011, Finarte's earnings amounted to a meagre €602,000, while reduced operating costs still totalled €1.6m. A last sale of modern art on 21 June was widely perceived as its death knell, for there were no further sales planned and Corbelli's attempts to find new shareholders and raise €7.5m were clearly leading nowhere.

Meanwhile, ATG became aware of at least one consigning English dealer who, despite promises of a payout on goods sold last December, had not received payment by Easter. Our attempts to contact the auction house for comment on that matter resulted in emails sent directly to Finarte's two chief directors being returned labelled 'address unknown'. However, the dealer was eventually paid.

On the evening of June 30, the shareholders bowed to the inevitable and pulled the plug.

Written by

ATG Reporter

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