Bankruptcy Filing Offers Salander Temporary Reprieve

NEW YORK—A judge provided Salander-O'Reilly Galleries proprietor Lawrence Salander with a small measure of relief on Wednesday, announcing a stay on new claims against the controversial dealer in light of a bankruptcy petition Salander filed last week. In addition, there will be a stay on all existing lawsuits pending the resolution of the bankruptcy proceedings.

New York City Supreme Court Justice Richard B. Lowe III's action is the latest development in the saga of the Upper East Side art dealer, who has been accused in about 40 lawsuits of defaulting on his financial obligations and selling or trading art owned by other people to pay off his own debts. (See "The Salander Chronologies" for a more detailed account of the suits.) The Chapter 11 bankruptcy petition that Salander and his wife, Julie, filed in Poughkeepsie, New York, on Friday states that the couple has outstanding debts between $50 and $100 million.

In an affidavit submitted with the petition, Salander said that the proceedings were "initiated to prevent the race to the courthouse" and to allow "an orderly process in a single forum … to address competing claims to ownership and other interests in paintings and other works of art I own."  

According to John W. Moscow, the attorney representing Salander in the bankruptcy case, Salander-O'Reilly Galleries is also expected to file for Chapter 11 bankruptcy. Creditors seeking $4.6 million in claims filed a petition for involuntary Chapter 7 bankruptcy against the gallery on November 1, trying to force an immediate liquidation of Salander-O'Reilly's assets.

Expressing fears that the bankruptcy case could take so long that the statute of limitations on certain claims could lapse before the creditors are satisfied, Barry Slotnick, an attorney representing Renaissance Art Investors, asked Justice Lowe to stay the claims "as status quo." The judge granted the request. The next hearing in the bankruptcy case will be in Poughkeepsie at the end of next week.

Moscow, Salander's attorney, acknowledged that the proceedings could last indefinitely. "Bankruptcy, especially if it works well, can take a while," he said. "Otherwise the guys with the quickest lawyers and the most articulate spokesmen end up with a disproportionate share of the assets."