Auction house Mossgreen under voluntary external administration
The auction house Mossgreen has gone into voluntary external administration. Mossgreen billed itself as one of Australia’s largest auction houses.
The move came December 21 with the appointment of three administrators from accountants BDO, James White, Nicholas Martin and Andrew Sallway.
It followed failed fundraising attempts in early December.
The first meeting of creditors is January 4, 2018.
It is understood creditors will be told Mossgreen are "restructuring" with no plans to close any outlets or lose staff, and creditors would be paid.
Westpac is listed as having a registered security interest over the company.
On the eve of the decision, Jack Gringlas of Jadig Investments Pty Ltd is understood to have been advised December 20 given his status as a secured creditor of the company which has showrooms in Melbourne's Armadale, Queen Street, Woollahra in Sydney and Parnell in Auckland.
The Australian Financial Review's Peter Fish reported in August that Mossgreen had parted company with its chairman and major financial backer, Jack Gringlas.
The 172 lots (pictured onsite) included the sale of a $192,200 Ian Fairweather work which had an $80,000 to $120,000 price guidance. A Tim Maguire fetched $117,800.
Mossgreen was known for its single-owner sales, especially since the estate of the late art patron Ann Lewis in 2011, and then an array of objects from much-loved artist Margaret Olley’s Paddington, Sydney home. Its first auction in its Armidale premises in 2013 was the collection of John and Marita McIntosh. McIntosh is a Melbourne establishment stockbroking doyen.
In 2014 there were the contents of Musk Farm, the Stuart Rattle country Victoria estate. Its most recent auction on December 7 was contents of Dr John Sheehy and Jean Sheehy with just 274 of the 438 lots being sold.
It was in late September 2017, that BDO was approached by the company’s accountant, Laura Raymer of CFO Strategic, to provide assistance to the Mossgreen in assessing its financial position.
BDO was formally engaged on 26 October 2017 to undertake an independent business review.
A final report was issued to Mossgreen on 8 November 2017 after documentation was provided relating to its financial position and operations.
A December 12 meeting between Mossgreen and BDO got an "update on the company’s financial position including attempted fundraising attempts." It was also attended by David Hall of Allunga Advisory.
Paul Sumner has over thirty years experience working in the art and antiques industry with international and Australian auction houses.
Sumner, the son of art and antique dealers, took his first auction at age 17.
He emigrated to Australia in 1987 to commence work with Sydney Auction house Rushton Fine Art and joined Christies Australia in 1990, becoming their Sydney manager in 1992.
He was then headhunted by Sotheby’s Australia, and at age 32 became their youngest ever managing director.
Paul held this position until 2001 when he was appointed the Managing Director of Sotheby’s London Auction house at Olympia, London.
He returned to Australia after this contract period to set up a new company Mossgreen with Amanda Swanson.
After nine-years of growth Mossgreen merged with Leski Auctions in 2012. Mossgreen and Leski had a combined turnover in its first financial year of $22 million.
The Mossgreen Melbourne rental premises were sold by Jagid Commercial Pty Ltd mid-year when buyers were advised the annual income was $481,960 per annum with favourable 3.5% rental increases every year, plus the benefit of a mid-term market review in 2020.
The former Armadale Theatre building in High Street, Armadale sold for around $10 million to an investor, John Karkar after a marketing campaign that saw 10 plus offers.
The property, 926-930 High Street,adjoins Armadale train station. It had Mossgreen Tearooms-Melbourne, in partnership with Peter Rowland Catering, which offered one of the finest high tea experiences in Victoria.
The premises had last traded in 2012 for $5.06 million. Previously, the building was occupied by art dealer Sotheby’s.
CBRE’s Retail Strip Investments team comprising Josh Rutman, Rorey James and Lewis Tong negotiated the sale.
Rutman said the international marketing campaign appealed to a mix of local and offshore investors.
Rutman noted that "the international marketing campaign appealed to a mix of local and offshore investors who were attracted to the long-term lease, location and confidence in the Mossgreen business."
“Long-term, secure leases are hard to find in the current market, with many economists taking a ‘lower for longer’ view on investment returns. The fixed annual rental increases will prove highly attractive to prospective investors looking to house their funds in bricks and mortar assets,” Mr Rutman said.
James said the significant capital appreciation - almost $5 million in less than 5 years - in such a short period of time highlighted the lack of blue chip investment properties available in the Melbourne market.
Since the administration was formalised, Paul Sumner advised clients by email that "Mossgreen has chosen to take a path of voluntary administration during the month of January at a time that will least impact our clients and which will allow the company to re-structure its business.
"The company is looking forward to a very strong calendar of auction-sales that are contracted and already catalogued for the first half of 2018, starting in February.
"No vendors will lose any money in this process and neither will any of our staff, who will also be fully supported through this process."