A lawsuit between German finance firm FAP and Inigo Philbrick reveals the backstage maneuvering in the market..
This commentary by Marion Maneker is available to AMMpro subscribers. (The first month of AMMpro is free and subscribers are welcome to sign up for the first month and cancel before they are billed.)
The lawsuit in ARTnews’s post yesterday reveals a lot about the state of art dealing today. That is, if you can read past the statement by Christie’s lawyer Jason Pollack in response to examining a “sellers agreement” dealer Inigo Philbrick produced for his former partners, German finance firm FAP.
The agreement purported to show a $9m guarantee from Christie’s for a work Philbrick sold in May of this year. FAP sent it to Pollack for verification. In response, Christie’s Pollack, according to court papers, wrote in an email, “We believe that is a falsified document.”
That statement may prove to be the drama in the court case but there’s plenty of interesting reading in the rest of the emails. The relationship between FAP and Philbrick is, by most accounts, a common one in an art market where dealer stock has become much too valuable for most dealers to be able to afford.
Smart, aggressive, and enterprising young dealers who lack the financial resources to capitalize on opportunities in the marketplace must find ways to acquire inventory. With long experience in the art world, the German financiers entered into an agreement with Philbrick in November of 2015 to fund some of Philbrick’s purchases. The deal would allow FAP to remain the owner of the artworks while Philbrick kept them under his control while seeking buyers.
Together, Philbrick and FAP bought three works worth nearly $11m, according to the complaint. The works were two Donald Judd sculptures and a large Rudolf Stingel photorealist painting of Pablo Picasso which would become the subject of that sellers agreement, as outlined in the court papers.
Things must have gone well in the relationship because two years on, FAP was buying more art with Philbrick, as outlined in the court filing. They spent $3.3m on a Yayoi Kusama. Two months later, the group was spending a little more than $13m on a cache of five works, another Kusama, another Stingel, two Christopher Wools and a Wade Guyton.
That’s almost $28m in art concentrated in only nine works. The high dollar value shows just how hard it is for a dealer to maintain enough stock to stay in business. This is only one relationship. The lawsuit doesn’t tell us how many other factors Philbrick was working with. Nor do we have any way of knowing how many other dealers FAP has backed.
According to the claims in the lawsuit, tensions came to a head between Philbrick and FAP in early September of this year when FAP began to doubt the veracity of Philbrick’s claims about that guarantee. FAP first became suspicious when Christie’s reported the lot sold for a price in the $6m range, far below the $9m guarantee Philbrick kept insisting the auction house had provided. Days later, FAP began moving to secure their property.
The relationship between Philbrick and FAP had begun to fray much earlier in the year. In February, FAP and Philbrick were keen to capitalize on the sale of a Stingel sold some time in 2018 by a “volatile Russian” client named Leonid. According to Philbrick’s email provided in the court papers, he and Leonid had worked together for eight years. There was only one problem. Leonid was very slow in paying.
That same month, if the emails in the complaint are anything to go by, Philbrick was contemplating his next move to maximize sales. Brett Gorvy, Philbrick suggested in an email attached to the complaint, wanted the other Stingel, “the Triptych,” for Lévy Gorvy’s booth at Art Basel in Hong Kong. Showing with Lévy Gorvy, Philbrick avers, was a stopgap measure should he be unable to sell the work before the fair. “I’m happy to do this on the condition that it is a Day 1 work,” Philbrick writes to FAP. “Since an appearance at Basel is somewhat akin to submitting a work to auction. I have this in my mind as the end sale point for this work.”
Behind the scenes in the art market, there’s a complex web of ownership that mimics what happens at auction. The world’s great art fairs, and the marquee dealers’ booths within them, are stocked with works on consignment. Some of that work is owned by collectors culling a piece here and there either because it has fallen out of favor or the collector is raising funds for one project or another or perhaps just to buy more work or pay for works already bought. But a meaningful portion of the stock at blue chip galleries is owned by factors like the folks at FAP.
Those factors may have opinions. And they can get cranky when their views are ignored. After the late March Hong Kong fair, the owners of FAP wrote to Philbrick, according to the emails in the court papers, to say ruefully, “we did not want the Triptych to be shown with L & G. [T]hey have a tendency to be not too careful with the works consigned to them — look at their Instagram post of their booth during the last day of the fair. I assume they have quite a reach and as a result everyone could figure out that our painting was still for sale.”
Despite having had Lévy Gorvy’s booth in mind as “the end sale point for this work,” Philbrick was able to conjure up a last-minute buyer. Leonid, the “volatile Russian,” as Philbrick referred to him in emails filed with the court papers, was back. He bought the Triptych in the nick of time for a very good price.
“The fact that Leonid steps in at $5m is, frankly, amazing and a huge arm twist,” Philbrick tells FAP in an email that is an exhibit in the complaint.
A week earlier, Philbrick had been tap-dancing furiously to keep FAP happy. There were concerns that Philbrick wasn’t paying enough attention to selling FAP’s stock and suspicion about Philbrick buying other works when he still had commitments to FAP. “I need inventory for Miami shows,” Philbrick explained. “I had believed we’d grow into this new Miami business together and I hope we still will once this latest set of deals is through. There is so much good business to be done down there.”
Always pitching, Philbrick floats an Ed Ruscha painting to FAP in his February email. That same month, he touted Robert Ryman’s market even though he had shown a small Ryman with Lévy Gorvy in their Madison Avenue gallery the year before and was forced to put it into the June 2019 sales in London with a very low estimate to generate enough interest for it to sell and make back his money even at a slight loss.
In the same email as the Ruscha, Philbrick announces he is looking at works by Bridget Riley and Dana Schutz to buy and flip. FAP seems to have passed on those. Perhaps someone else did not.