The Impact of Art Gallery Closures on Artists and Collectors

“When a gallery closes for good,” Thomas C. Danziger, a New York City attorney who specializes in art law, told Observer, “the question becomes: who owns the art?”

Maggi Hambling exhibition
Artist Maggi Hambling at an exhibition at Marlborough Gallery in London in 2020. Photo by Jonathan Brady/PA Images via Getty Images

Businesses open and close all the time, and art galleries are no exception. Dealers retire, others close up shop when bankruptcy looms, some die with no succession plan and still others simply decide, for a host of reasons, to exit the scene. In New York, Cheim & Read said its goodbyes in December and Helena Anrather shut its doors in March. The Fortnite Institute ceased operations earlier this week, and Betty Cuningham Gallery in the Lower East Side will end its two-decade run later this year. Yesterday (April 4), the 78-year-old blue-chip Marlborough Gallery, which has spaces in London, New York, Barcelona and Madrid, made headlines when it announced it would be closing in June.

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Art galleries often run on slim margins to begin with, and the pandemic was tough on businesses across the board. Other recent NYC gallery closures: JTT, Foxy Productions, Queer Thoughts and Denny Gallery. London has seen a similar spate of closures as the local market has contracted. It’s not unusual for gallery owners to land on their feet—Jasmin Tsou, founder of JTT, became a director at Lisson Gallery. But for the artists represented by galleries that close and for the patrons who worked closely with said gallery owners to build art collections, the disruption can range from nuisance to traumatic.

Sculptor and installation artist Judy Pfaff could not have guessed that she would be without a New York City gallery for a very long time when legendary art dealer André Emmerich retired in 1997, but she waited seven years before she was brought into the Ameringer|McEnery|Yohe fold in 2004. “A few people talked to some dealers about taking me on, but they didn’t want to touch me,” she told Observer. “Then, it hit me that the art world has no memory; it doesn’t owe me anything; there’s no one knocking on the door. I better hold onto my teaching job and figure things out. It was a total reality check.”

But artists can and do up and leave their dealers—usually for reasons involving the advancement of their careers, but not always. Terry Dintenfass “never paid me, or it took forever to get her to pay me,” said painter Nancy Hagin. Sculptor William King left Dintenfass after she refused to give his then-girlfriend a show. “Robert Miller just wasn’t nice to me,” said painter Janet Fish. “Staff would roll their eyes when I walked through the door, as though they’re sorry to see me.” Alex Katz felt Pace Gallery “had low energy when it came to my work.” Pfaff left the Holly Solomon Gallery after thirteen years, when the dealer moved from a more spacious downtown address to a fifth-floor location on 57th Street “where I couldn’t get things in and out. There was only a passenger elevator.”

The point is that artists generally have choices. “There are some I worked with for forty years,” veteran dealer Betty Cuningham told Observer, “and I have been trying to get them situated with other dealers.”

She sees the closing of an art gallery as “harder for collectors than for the artists.” An engaged art dealer provides long-standing buyers with information on up-and-coming artists, as well as first dibs on artworks, and the insider access that potentially took years to develop isn’t easy to replicate elsewhere. Galleries also help their buyers sell. Cuningham is now returning work she took on consignment to collectors, though she wanted to make it clear she’s not completely retiring from the art world. “I can’t just store them,” she said of the consigned pieces but added that she and some of these consignors “might set up a separate arrangement” in which she looks for prospective buyers on their behalf.

Meanwhile, Cheim & Read director Maria Bueno planned to work with the gallery’s consignors and patrons in her “new venture Bueno & Co., which is a private fine art dealership and artist management service. Bueno & Co will open a private showroom in New York later this year.”

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Given the bleak headlines, collectors might wonder what exactly one is to do if one’s preferred art gallery goes belly up. “When a gallery closes for good,” Thomas C. Danziger, a New York City attorney who specializes in art law, told Observer, “the question becomes: Who owns the art?”

That question is easier to answer when artists consign their work to galleries—at least in New York. The state’s Arts and Cultural Affairs Law decrees that, should an art gallery become subject to a lien from a bank or face bankruptcy, consigned artwork can’t be taken by a creditor in payment of a debt but must be returned to the artist or their heirs, in the case of deceased artists. That law also requires dealers to place proceeds from sales of consigned artwork “in trust” for the artist, meaning galleries can’t use that money for any other purpose than paying the consignor. California and twenty-nine other states have similar legal protections for artists who consign artworks to galleries.

While those laws don’t apply to nonartist collectors who consign artworks to galleries, art collectors can protect themselves by filing a UCC-1 form for works on consignment. The form announces publicly that the consignor has a prior lien on their artworks, so in the event a gallery declares bankruptcy or a dealer disappears in the face of numerous creditors, leaving a warehouse full of art, the consignor has a legal right to take back their work. Ideally, the UCC-1 filing should occur at the time of consignment, but consignors would still be protected if they file in advance of a bankruptcy.

It’s a simple fix—the form is typically available online or the filing cost is nominal, usually $25—but many high-end consignors are reluctant to file the form, even when advised to do so by their lawyers. “They don’t want to announce publicly that they are looking to sell something, which a UCC-1 does,” New York City art lawyer William Pearlstein told Observer. “Some would rather stay private than disclose. Myself, I would rather be protected than private.”

Another less public protective measure art collectors can pursue is drawing up a consignment agreement with the gallery owner or dealer that explicitly states the artwork is the property of the collector rather than of the gallery.

That leaves one final question, which is whether there’s an epidemic of art galleries facing financial distress. Commentary on the state of the art market tends to be mixed, with art fair sales figures and the annual UBS market report generating pessimism and optimism in equal measure.

“There’s barely any credit and lending in the gallery sector and businesses are already heavily burdened with rents, so many don’t have spare funds to ride it out,” Dr. Clare McAndrew, a cultural economist and founder for the Dundrum, Ireland-based Arts Economics research firm, told Observer. She added that after the worldwide financial crisis of 2008 and 2009, “many businesses were only starting to do well again in the last few years” and may not have the resources to weather this storm.

So, how can one know if a particular gallery might be in financial distress? Insiders, such as art advisors, art lawyers or other dealers, may have an inkling. Pearlstein said that offers of “huge discounts of expensive artworks or firing most of the staff” might suggest a gallery is in trouble. One also could conduct a UCC search to see if a particular gallery owes money to multiple lenders and if there are any tax liens (by the IRS or otherwise) or judgments based on a failure to pay rent or repay loans. The filings won’t tell a complete story, but for collectors who are feeling anxious, they’re a place to start.

The Impact of Art Gallery Closures on Artists and Collectors