Sotheby’s to reopen galleries as they report £377 million in outstanding debt

After suspending live auctions in March due to the pandemic, Sotheby’s is “actively preparing” to reopen its galleries in London and New York by next month. This announcement follows the release of a significant report that revealed the company owes an outstanding debt of US$467 million (£377 million, plus interest).

Some have hailed the decision to reopen as “the first real test of the art market since the coronavirus outbreak”, with the Impressionist and Modern Art auctions leading the way in New York from the week of 29th June.

The postponed sale will include Roy Lichtenstein’s bold painting ‘White Brushstroke I’, estimated to fetch between £15-£25 million, and Francis Bacon’s striking ‘Triptych Inspired by the Oresteia of Aeschylus’, which has a staggering low estimate of £48 million.

According to Sotheby’s Chief Executive Charles Stewart, these plans are “pending the lifting of certain restrictions and confirmation from the relevant authorities”. Stewart reassured employees in an email this week that many teams are indeed returning to work in Europe and Asia. “You will hear more about our specific plans and innovations to ensure success and safety, and we are excited about the very high quality of the sales,” affirmed the Chief Executive.

But Stewart’s upbeat announcement could not completely soften the blow of the company’s detailed annual report, which disclosed its outstanding debt. By the end of the year Sotheby’s must pay US$119 million (£96 million), just over a quarter of the overall debt, in interest and principle. The remaining debt will be paid back over the next four years.

Like countless companies around the world, the unprecedented global closure of Sotheby’s resulted in an expected period of financial decline. The report acknowledged that this trend will continue “until we can safely resume our live auctions.”

Yet the prominent auction house has still been able to fulfil some of its obligations relating to the debt by cutting costs on account of the coronavirus; closing buildings has reduced capital spending, around 200 employees were furloughed, in-person sales and employee bonuses have been temporarily suspended and some staff members have had their salary cut between 20 and 30 percent.

I believe that Sotheby’s can solve its financial issues if it wants,” explained attorney and art law specialist Thomas Danziger. “But the longer that there is no reaction or response publicly from the company, the harder its going to be to fight the perception that there is an issue.

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