Salander Case Converted from Reorganization to Liquidation

NEW YORK—Beleaguered art dealer Lawrence Salander and his wife, Julie, have been ordered to cede control of their finances to an independent trustee, reports Bloomberg.

U.S. Bankruptcy Judge Cecelia Morris yesterday approved a motion, introduced by the U.S. Justice Department, to convert the couple's case from a Chapter 11 reorganization to a Chapter 7 liquidation, in which the appointed trustee sells everything except "exempt assets." The couple filed for bankruptcy protection in November but have since incurred $800,000 in new debt, not including money spent on the bankruptcy proceedings, and have been slow to sell assets. Justice Department lawyer Eric Small pointed out in court that the Salanders have yet to sell either their Manhattan townhouse or their home in Millbrook, New York.

Salander's Salander-O'Reilly Galleries also filed for bankruptcy protection in November, after the gallery and he were hit with dozens of lawsuits alleging that the dealer had failed to remit payments on debts or had sold works he was not authorized to sell, keeping the proceeds.