The insolvency report of Simon Lee Gallery (SLG) exposes a labyrinth of debt and contentious dealings, raising significant concerns about the gallery’s financial management. Prepared by BDO LLP, the 44-page report offers a comprehensive overview of SLG’s economic predicament, underscoring the complexities of its operations and the challenges it faces in settling outstanding debts.
The report, issued on 5 September 2023 and obtained by The Art Newspaper, lays bare the extent of SLG’s financial liabilities, totalling an estimated £10 million owed to 153 creditors. This staggering debt includes outstanding payments to artists exceeding £1 million and mounting pressure from creditors such as US dealer Stefan Simchowitz, demanding the return of consigned works.
SLG’s financial trajectory, once buoyed by consistent profits spanning 17 years, witnessed a dramatic downturn, with turnover plunging from £51.5 million in 2018 to a mere £22.4 million in 2019, resulting in a net loss of £3.2 million. The onset of the global COVID-19 pandemic further exacerbated SLG’s financial woes, prompting the gallery to seek a £1 million Coronavirus Business Interruption Loan from Barclays Bank.
Amid mounting financial strain, SLG failed to file its accounts and tax returns post-2019, triggering HMRC’s intervention with multiple winding-up petitions. Despite settlement agreements reached during previous petitions, HMRC’s persistent pursuit led to the freezing of SLG’s accounts by Barclays, hastening the gallery’s descent into insolvency.
SLG’s closure of its New York and Hong Kong branches, coupled with the dismissal of most of its employees, underscores the severity of its financial crisis. The report’s exhaustive examination of SLG’s debts reveals a tangled web of outstanding payments to prominent galleries and artists, casting a shadow over the gallery’s reputation and financial viability.
As the administration process unfolds, the report highlights discrepancies in SLG’s financial records, underscoring administrators’ challenges in untangling the gallery’s financial affairs. Despite the prospect of repayments from outstanding transactions, the report paints a bleak picture of SLG’s economic future, with a projected shortfall of almost £6.7 million.
As SLG grapples with the fallout from its financial turmoil, questions linger about its future viability and the broader implications for the art world’s economic ecosystem. With the winding-up process likely to extend beyond the projected timeline, SLG’s insolvency is a cautionary tale of the perils of financial mismanagement in the art market.
Top Photo: Courtesy Simon Lee
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