The Berry-Hill Gallery saga took another turn this week when rumors circulated that John Paulson had bought the gallery. Erica Orden cleared up the matter with her Wall Street Journal story that reveals no sentimental play by the hedge fund manager but simple calculation by his special opportunities fund (no doubt using the gallery’s building as an anchor asset.) Here’s Orden:

The fund run by Paulson & Co. has purchased a loan to American-art specialist Berry-Hill Galleries for about $10 million, as well as the mortgage on the gallery’s property in an elegant townhouse near the Frick Collection, according to public records and people familiar with the matter. A spokesman for Paulson & Co., Armel Leslie, declined to comment.

The involvement of the fund, Paulson Credit Opportunities Master Ltd., has in effect rescued the gallery from a precarious position.

Berry-Hill, which owns work by artists including Winslow Homer and Milton Avery, its website says, defaulted last year on a debt of $9.5 million to an entity now known as American CapitalLtd. according to public records. Dozens of paintings and sculptures used as collateral were seized from the gallery’s headquarters on East 70th Street. American Capital couldn’t be reached for comment.

Shortly afterward, the gallery’s previous mortgage lender began foreclosure proceedings on a $16 million mortgage, according to public records.

Paulson Fund Aids Gallery (Wall Street Journal)