New York-based socialite and collector Libbie Mugrabi has made headlines over her ongoing dispute with a lending firm specializing in art-backed loans. The dispute stems from a failed transaction in 2023 when Libbie sought a $3 million mortgage from Artwork Capital Group.
As a part of the deal, Libbie was to place up a 1982 Jean Michel Basquiat price an estimated $30 million as collateral. She determined to place up an Andy Warhol portray from his Jacqueline Kennedy Onassis portrait collection as extra collateral to cowl a $12,500 due diligence payment wanted to safe the mortgage. Whereas the Basquiat remained in Libbie’s possession, ACG took the Warhol portray.
A Mortgage Gone Flawed
The usual transaction went haywire after ACG declined to offer Libbie a mortgage, citing issues about her credit score, however didn’t return the Warhol. Libbie filed a police report in Southampton, N.Y., alleging that the ACG stole the Warhol. ACG additionally alleges that Libbie distributed “Wished” posters in entrance of their Higher East Facet workplaces and within the Hamptons, that includes images of ACG’s administrators, prompting the corporate to hit Libbie with a $30 million defamation lawsuit.
Not one to draw back from the highlight, Libbie famously wore a bulletproof vest to a divorce listening to, claiming her billionaire ex-husband, artwork collector David Mugrabi, tried to rent a hitman to kill her. Nonetheless, whereas Libbie’s alleged habits in the direction of ACG seems outlandish, this case has extra substance than what seems on the floor.
For starters, in an October 2024 story, Artnet reported that the charges owed to ACG by Mugrabi have been initially beneath $27,000, based mostly on courtroom information, however ballooned to about $97,000 (in a newer story, The New York Occasions reviews that Ian Peck, a director at ACG, asserted in courtroom paperwork that the corporate prices have risen to over $200,000, not together with reputational damages or anticipated future attorneys’ charges). The Warhol is believed to have been bought off by ACG to cowl the unpaid charges regardless of alleged provides by Libbie to pay all of the charges stemming from the mortgage software; particulars in regards to the value are muddled, and the patrons haven’t been disclosed. In accordance with The New York Occasions, legal professionals for Libbie have argued in courtroom papers that the portray’s worth is way over the corporate’s precise bills.
Moreover, Libbie asserts that solely the Warhol was agreed on to be collateral for the charges. But, the destiny of the Basquiat stays in limbo. In accordance with courtroom paperwork, ACG is arguing that it’s entitled to possession of the Basquiat as properly to cowl “what it views as the extra value of harm to its fame.”
Artwork as Collateral Good points Traction
As Sherri Cohen and Monika Merchan focus on of their forthcoming article for Trusts & Estates, artwork is more and more being acknowledged as a robust asset class that’s extensively marketable and holds monetary energy as collateral. Whereas charges may be larger with art-backed loans as a result of typically unpredictable and risky nature of the artwork market, purchasers are more and more in search of to leverage their collections to entry liquidity in addition to “built-in appreciation with out promoting the artwork.”
In contrast to different loans, utilizing artwork as collateral has extra prices—together with appraisal, insurance coverage and storage charges. If a mortgage software fails to undergo, the applicant is left footing the invoice for the appraisal and different due diligence charges, not in contrast to the case mentioned right here.