Auction house Mossgreen enters voluntary administration

Auction house Mossgreen enters voluntary administration

Mossgreen Auctions in Woollahra, Sydney. 26th December 2017 Photo: Janie Barrett The 105-year old former Armadale Public Picture Theatre, with the insitu tenant, Mossgreen auction house,has sold for a speculated $10 million.

The co-owner of high-profile art gallery and auction house Mossgreen says creditors will not be out of pocket after the shock news the company has gone into voluntary administration.

Paul Sumner, who is also chief executive and co-founder, said the move was due to debts following the company’s rapid expansion and the withdrawal of its key investor.

On December 21 Mossgreen, which has branches in Melbourne, Sydney and Auckland, thanked customers via its Facebook page for their 2017 support and announced its holiday office closure.

The next day, the Australian Securities and Investments Commission announced that administrators had been appointed for Mossgreen Pty Ltd.

The administrators are James White, Nicholas Martin and Andrew Sallway from corporate advisers BDO.

A BDO media release says they are undertaking “an urgent assessment of the business and will be exploring all options”.

The first meeting of creditors will be held in BDO’s Melbourne office on January 4.

Mossgreen was founded in Melbourne in 2004 by Mr Sumner and wife Amanda Swanson. Its significant recent growth was bankrolled by businessman Jack Gringlas.

In 2013, Mossgreen acquired coin, stamp and memorabilia experts Charles Leski Auctions and in 2015 acquired New Zealand auction house Webb’s.

In 2016, Mossgreen opened its first Sydney auction rooms and gallery, in the exclusive suburb of Woollahra.

But in July this year, Mr Sumner and Ms Swanson bought back Mr Gringlas’ share of the business. iFrameResize({resizedCallback : function(messageData){}},”#pez_iframe_tipstar_678″);

“Since then, we’ve been advised to take the [voluntary administration] course, as the best way to clear historical debt – associated with previous investors – out of the business, and restructure the company and move forward,” Mr Sumner said.

“We’ve probably grown a little bit fast considering that the market plateaued. I’ll be the first to say that that’s the case.

“What we’re doing now is the opposite. We’re restructuring, taking out some of the costs of our business, so that we are a much leaner, healthier business starting from the first of February.”

Mr Sumner said Mossgreen did not plan to close any outlets or lose staff, and creditors would be paid.

“Not one vendor or one buyer will lose one dollar in this process,” he said.

The first of Mossgreen’s 2018 auctions would proceed on February 5. Items held under consignment to sell or buy would not be lost to their owners.

Mr Sumner said all creditors had been informed of the administration.

“Mossgreen is a business that relies on trust, so when you do something like this, your reputation will be affected, by how you deal with your vendors and buyers.”

Mossgreen is known for its sale of single-owner collections such as British collector Frank Cohen’s 80 contemporary artworks valued at more than $5.8 million.

It handles auctions of Australian masters paintings including Russell Drysdale’s Grandma’s Sunday Walk, which sold for $2.4 million.

It also sells collectibles such as Dick Reynolds’ 1930s VFL Brownlow medals, and a 1969 Mini Cooper S car.

In an Australian Financial Review profile in 2016, Mr Sumner said Mossgreen’s turnover grew from about $10 million before the Leski merger to $39.6 million in 2015, with staff numbers jumping from eight to 55.

“We won’t continue at this pace; this is probably the last big growth spurt of our business,” he said at the time.

The-then AFR reporter, Katrina Strickland, put to Mr Sumner that such rapid expansion would spark inevitable questions about growing pains and digestion, but Mr Sumner replied that “the greatest risk in this business is not growing. Costs go up but the art market stays pretty flat. So you have to grow.”

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