Last week, the New American Cinema Group filed a lawsuit against the online auction company Paddle8, alleging that the auction house had misappropriated funds from a charity auction that it had held in November for the Cinema Group. Now, Paddle8 has filed for Chapter 11 bankruptcy in New York, shocking the New American Cinema Group and calling into question the specifics of Paddle8’s recent business operations. According to the original legal complaint, the auction in November included sales of works by artists including Tom Otterness, Kiki Smith, Jim Jarmusch and Jonas Mekas, but that Paddle8 has yet to send the New American Cinema Group the funds they were owed. Now, the organization isn’t quite sure what to think.
“We are deeply concerned by Paddle8’s bankruptcy filing, particularly given that the director of Paddle8’s board, Peter Rich, specifically acknowledged Paddle8’s payment obligations to the nonprofit charity in writing less than a week ago, and assured us that Paddle8 had ‘made arrangements to settle your client’s monies due immediately,'” Paul Cossu, an attorney who’s working for the New American Cinema Group, told Artnet in an interview. Compounding the strangeness of the situation is the fact that New American Cinema Group had previously held three other auctions in collaboration with Paddle8 that had gone off without a hitch.
Paddle8, which was launched in 2011 by Alexander Gilkes, Aditya Julka and Osman Khan, was among the first online platforms to capitalize on the rising boom of online sales when it comes to art auctions. Paddle8’s inventory is build around art objects priced between $1,000 and $100,000 offering consumers something like a respite from the blue chip universe. In its bankruptcy petition, Paddle8 named Jay-Z’s Shawn Carter Foundation and Justin and Hailey Bieber as creditors who’re owed money; the foundation is owed over $65,000 and the Biebers are owed over $73,000. Both parties had recently collaborated with Paddle8 on auctions.
In 2016, Paddle8 had merged with the Berlin-based online auction house Auctionata, but in early 2017, Auctionata filed for insolvency and Paddle8 secured funding from an investor in order to be bought out, spun off and restructured. It seems that Paddle8 may now be meeting a fate that’s similar to the one that befell their former partners.