Chapter 11 bankruptcy protection was granted to the Louisiana auctioneers at the beginning of April – in essence recognition that the business had more bills than assets and required both help from the court and an influx of funds to enable them to continue in business.
A court was told on April 7 that NOAG needed $562,334 to satisfy the immediate claims of around 200 unpaid vendors, with total liabilities reported at close to $4m.
The largest creditor by some margin is understood to be Texas dealer Susan D. Krohn, the owner of Cakebread Art Antiques Collectibles of Houston, who is owed $2m.
According to court documents, other outstanding invoices include $143,445 to Rare Art Inc. in New York; $85,862 to First Bank and Trust Visa in New Orleans and $61,000 to MPress, a New Orleans printing company.
Paying vendors ahead of all other creditors was considered central to keeping the business afloat. The argument successfully put forward by NOAG to the court was that: "By honouring [these contracts], the debtor will maintain normal relations with the consignors, maintain its reputation as one of the premier auction houses in the country, and ensure that the debtor continues to obtain its unique inventory from its network of consignors."
The judge agreed to sidestep the usual protocol in Chapter 11 cases and, on May 3, approved a financing arrangement that allows local firm Aschaffenburg Assets to loan $500,000 of the funds to enable the reorganisation to proceed and, say the auctioneer's lawyers, ensure all the vendors are paid in full.
The Aschaffenburg family owns a major New Orleans landmark, The Pontchartrain building on Saint Charles Avenue.
The judge also approved an order mandating that all funds received by the auction house be kept in three separate accounts: one for company funds money; one for funds from the sale of inventory pledged by the auctioneers to their bank as collateral for a loan; and one for all funds realised from consigned goods.
By Roland Arkell