[intro] She Knew She Had to Sell But Won’t Cooperate; Where’d the Money Go? [/intro]
Josh Baer of the Baerfaxt set off a firestorm this morning when his subscription-only email detailed a court case between famed photographer Annie Leibovitz and Art Capital Group, the art financing firm. News of Leibovitz’s loans with ACG landed the company on the front page of the New York Times in February in a sign-of-the-times story.
Leibovitz’s bailout seems to have been a bit more complicated than was first reported. Bloomberg just posted some of the thin details available on the case. The Times’ own City Room blog is hard at work pumping out the details:
Among other demands in the suit, the company, Art Capital Group, based in Manhattan, is asking the court to order Ms. Leibovitz to allow real estate agents access to her town houses in Greenwich Village so the property can be appraised and prepared for sale to pay back the loans.
The suit charges that Ms. Leibovitz has engaged in “boldly deceptive conduct” and has failed to pay hundreds of thousands of dollars due under the agreement.
Ms. Leibovitz approached Art Capital in June 2008 about her “dire financial condition” arising from her “mortgage obligations, tax liens and unpaid bills to service providers and other creditors,” the suit contends. […]
“In connection with the negotiation of this $22 million credit facility, Leibovitz discussed and acknowledged that Leibovitz’s fine art, intellectual property and real estate assets, all collateral for the loan, would likely need to be sold, in whole or in part as part of the process of Leibovitz’s financial restructuring,” the suit charges.
In the context of this suit, the announcement last Fall that Phillips de Pury would become the sole agent for Annie Leibovitz’s photography suggests the arrangement was made through Art Capital Group or, at least, in preparation for sale of her assets necessitated by the loan.
Here’s the City Room on the timing:
Art Capital and Ms. Leibovitz set up a one-year loan agreement with the company’s subsidiary American Photography starting in September 2008. In October, she signed a related agreement granting Art Capital the exclusive right to sell every photograph she had ever taken, her town houses in Greenwich Village, and her country home in Rhinebeck, the suit contends.
Phillips de Pury announced their relationship with Leibovitz in October. Here’s how The Art Newspaper told the story:
Phillips de Pury is to represent the photographer Annie Leibovitz in a move which further blurs the boundaries between auction houses and dealers. According to Simon de Pury, Phillips’s energetic chairman, Leibovitz approached the auction house through Charlie Scheips, its worldwide director of photographs, who joined in 2007 and has known the photographer since 1987.
Leibovitz previously worked with New York dealer Edwynn Houk for seven years. (Mr Houk declined to comment.) Phillips will take responsibility for Leibovitz’s Master Set—the artist’s own selection of 200 representative works—and her archives, while New York agency Art + Commerce will continue to represent her commercial work.
Gawker adds much more in terms of details on the fight over Leibovitz’s photographs:
Art Capital took physical custody of Leibovitz’s negatives when it made the loan, so it wouldn’t have any trouble selling those to recover some of the money if it wished. But the real money is in the intellectual property rights to Leibovitz’s portfolio, and for that, it needs her cooperation to get the most value.
“The agreement with her was that we’d go out and sell it for more than $24 million,” says a source close to Art Capital. “And now, she’s not making herself available. Any likely buyer would say, ‘Gee, can I meet with Annie?’ I don’t think anyone would buy it if they don’t feel they have a cooperative seller.”
Leibovitz’s refusal to cooperate raises the question of whether she ever intended to pay Art Capital back, or whether she has already surreptitiously sold the archive using another agent. Her relationship with Art Capital began to go south in March, when Getty Images announced that it was taking on Leibovitz under a “a special multi-assignment collaboration.” It’s unclear what that means, but Getty’s release implies that Leibovitz’s “name and talent” had been added to the company’s “roster of elite photographers available for commission photography.”
That was a surprise to Art Capital, who, according to the suit, thought Leibovitz had pledged them the “right of first refusal to act as agent in connection with…the engagement by third parties of photographic services” provided by her—a way of hedging against the loan by at least getting commission on any of Leibovitz’s photos. According to the source, Leibovitz didn’t inform Art Capital of the Getty deal.
On another aspect of the story, how Leibovitz got into such dire economic straights, some point to the absence of gay marriage benefits. Leibovitz’s would have had to pay 50% inheritance tax on property she was bequeathed by her former partner Susan Sontag; had they been married, the property would not have been taxed. Julia Miranda makes that case:
When Sontag died in 2004, she bequeathed several properties to Leibovitz, who was forced to pony up half of their value to keep them. Yes, she makes a nice chunk of change from Vanity Fair, and yes, she probably could have just sold the properties when the market was good in 2004, but that’s not really the point. The point is she should never have been in the position of paying or selling to not pay as much in the first place. Her wealth and poor decision-making are incidental.
But the assumption about her inheritance is mistaken. Not only did Sontag not have nearly enough property to have triggered such massive inheritance taxes but Leibovitz was not her heir. The writer David Reiff, Sontag’s son, was her heir. The single largest financial problem for Leibovitz seems to have been a judgment against her because of renovations to her Greenwich Village townhouse. The work undermined the foundations of her neighbors. Some press reports claim she was forced to buy the properties.
Lender Sues Annie Leibovitz (New York Times)