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Simon Lee gallery’s £10m debt revealed in insolvency report




A proposal prepared by the insolvency practitioners managing the administration of Simon Lee gallery (SLG) reveals a fuller picture of the business’s debt while prompting further questions around its past dealings. BDO LLP’s 44-page report, issued 5 September 2023 and obtained by The Art Newspaper, charts how leverage and changing market conditions left the long-profitable dealer owing an estimated £10m to 153 creditors.For 17 years from its November 2001 founding, the report finds, SLG posted a net profit that remained “largely consistent” at between 1% and 3% of annual turnover. But after growing to £51.5m in 2018, turnover plummeted in 2019 to just £22.4m, resulting in a net loss of £3.2m. “Shortly thereafter, trading was significantly impacted by the global Covid-19 pandemic”, the report states, prompting SLG to seek a £1m Coronavirus Business Interruption Loan from Barclays bank.Happier times: Simon Lee with his wife, Carine, in 2014, when his gallery was in good financial health. An administrators’ report has shown that the business began to hit trouble in 2019 when its profits plummeted David M. Benett/GettySLG then failed to file its accounts and tax returns “for any period after the 2019 year end”. This led HMRC, the UK’s tax authority, to petition to wind up the business twice, in February 2020 and July 2022. Both times, the gallery reached a settlement agreement, and the petitions were dismissed.In February 2023, however, HMRC issued a third winding-up petition for £1.4m of assessed tax; Barclays froze the gallery’s accounts after the petition became public in March 2023. Nonetheless, SLG continued trading through its Hong Kong branch using an account there with Standard Chartered Bank. A third settlement with HMRC was negated when three of SLG’s creditors, with debts “totalling in excess of £500,000”, joined the winding up petition, preventing its dismissal.SLG closed its locations in New York and Hong Kong prior to the appointment of the joint administrators in July 2023. The gallery’s former Mayfair space, which is leased until August 2025, ceased operating last June and is now being rented by Maddox Gallery (which did not reply to our questions about its lease terms). Of the 15 people SLG employed before its insolvency, only three were kept on by the administrators.A spokesperson for BDO declined to answer questions from The Art Newspaper. A spokesperson for Simon Lee also declined to comment on the administration process.Debts and doubtsThe report’s most eye-opening section is its attempt to itemise SLG’s full debt. Among the 151 listed commercial creditors are prominent galleries such as PKM in Seoul (owed £209,351), Mendes Wood DM (£23,552) and London’s The Artist Room (£15,480). All three of these galleries declined to comment but did not deny being owed money by SLG.In contrast, although the report lists Hauser & Wirth with an unsecured claim of £3.4m—more than one-third of SLG’s total estimated debt—a spokesperson for the mega-gallery emailed The Art Newspaper, denying it was owed money: “Our financial team have looked into it. We have checked very thoroughly and this is an error in their records. We are definitely not a creditor.”(It is not uncommon for discrepancies, even major ones, to arise as the administrators work through an insolvent company’s financial records, which are often incomplete, erroneous or worse. In such cases, later reports would reflect new information uncovered during the process.)Meanwhile, a number of artists who are, or were until recently, represented by Simon Lee are listed as creditors collectively owed more than £1m. The Glasgow-based painter France-Lise McGurn has the largest claim (£631,300), followed by Jim Shaw (£254,316), Garth Weiser (£210,999) and Angela Bulloch (£145,346). Most artists approached by The Art Newspaper said they did not want to speak on record until after the administration process progresses to settlement agreements.Although the report parenthetically attributes a £295,278 claim to the Ghanaian artist Serge Attukwei Clottey, best known for his sculptures and installations using yellow plastic containers, Clottey tells The Art Newspaper he “has an excellent relationship with Simon Lee”. Upon closer inspection, however, the actual creditor is Simcor, an entity owned by the outspoken Los Angeles-based art dealer Stefan Simchowitz.‘Egregious example’ of non-paymentSimchowitz tells The Art Newspaper SLG in fact owes him even more money—around $400,000 (£316,000)—for works by Clottey sold on consignment from him. “This is the most egregious example of a gallery not paying me back that I’ve ever known,” he says.Simchowitz claims SLG is also still in possession of 16 unsold pieces by Clottey consigned from him and worth an estimated $1.8m; as we went to press, he was in talks to retrieve these works via Gurr Johns, the art appraisal and advisory group chosen by BDO to “assess the stock of artworks, and to devise a marketing and sales strategy to ‘maximise realisations for creditors’”, the report states. A further four works consigned by Simchowitz were still unaccounted for by the administrators, he adds.The report finds SLG also owes substantial sums to several other art businesses, including almost £100,000 combined to Frieze, MCH Group (which runs the Art Basel fairs) and The Armory Show (now owned by Frieze), as well as at least £145,000 to art shippers and logistics providers.Yet most of the deepest debts lie elsewhere. Barclays, SLG’s primary bank, is owed £736,749. (As a secured creditor, it will be repaid in full.) BDO itself accrued almost £570,000 in administration fees to 4 September 2023.Another of the heftiest claims in the report belongs to one of two consumer creditors, normally individuals who have paid upfront for goods not received or services not rendered. The report documents a Terry Taylor being owed nearly £2.25m.Hope for repayment?Upon appointment, the administrators received a debtor ledger from SLG detailing all monies owed to the gallery. The two largest entries, for two works the gallery claims have been sold but not paid for, amount to around £7.97m. Although the joint administrators caveat that these figures do not account for what is owed to the consignors, they pledge to follow up on both transactions, along with an outstanding balance of around £393,000 due from a US gallery from the sale of a jointly owned work “approximately three years ago”.Until those payments or others materialise, the report estimates just over £2.9m will be available to repay the claims from non-preferential staff and unsecured creditors, who typically receive—at most—a small fraction of the amount owed. In SLG’s case, the administrators calculate this will leave a shortfall of almost £6.7m.The report projects 10 July 2024 as the end of the administration but also states that the winding up process is “likely to exceed” this date.

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