Paddle8 Is Filing for Bankruptcy—and It Owes Tens of Thousands of Dollars to Justin Bieber, Jay Z’s Foundation, and Others

The filing comes one week after a nonprofit sued the auction house for allegedly misappropriating funds.

Paddle8's offices in New York during happier times. Photo courtesy Auctionata | Paddle8.

The online auction house Paddle8 has filed for Chapter 11 bankruptcy protection in New York just one week after the New American Cinema Group, a nonprofit founded by the late filmmaker Jonas Mekas, filed a lawsuit against the company for allegedly misappropriating funds from a charity auction.

On March 10, Artnet News reported that the nonprofit (which is independent from the Anthology Film Archives, another organization founded by Mekas) had filed a lawsuit against Paddle8, alleging that the auction house was withholding funds from a benefit sale it hosted back in November.

In a statement provided to Artnet News last week, Paddle8 said it expected “to resolve all of these situations quickly and amicably.”

But the bankruptcy proceedings have thrown a wrench into the process.

“We are deeply concerned by Paddle8’s bankruptcy filing, particularly given that the director of Paddle8’s board, Peter Rich, specifically acknowledged Paddle8’s payment obligations to the nonprofit charity in writing less than a week ago, and assured us that Paddle8 had ‘made arrangements to settle your client’s monies due immediately,” Paul Cossu, an attorney for the New American Cinema Group, tells Artnet News.

“It now appears that this was nothing but a bad-faith stalling tactic to buy Paddle8 time to wire money that should be going to charities to its lawyers.”

In the email from Rich, which Cossu shared with Artnet News, Rich says that “after the sudden departure of the company president and other personnel turnover we have been challenged with our very important responsibilities.”

Rich adds: “We apologize for any inconviences [sic] your client may have suffered.”

Paddle8 declined to comment on the bankruptcy filing.

The November sale on behalf of the New American Cinema Group included works donated by artists such as John Ahearn, Kiki Smith, Tom Otterness, Jim Jarmusch, and Walter Robinson.

According to the complaint, collectors had also started calling the nonprofit to inquire about the whereabouts of works they purchased at the auction. Since then, the New American Cinema Group has released many of the works, even though it says it is still awaiting payment from Paddle8.

Among the creditors listed in Paddle8’s bankruptcy petition are pop star Justin Bieber and his wife Haley, who recently curated the recent “The Biebers x LIFT LA x Inner City Arts” auction. Paddle8 says it owes just over $73,000 to the couple.

Jay Z’s Shawn Carter Foundation is also listed as a creditor, and is owed just over $65,000, presumably for a charity auction held last November.

The Rema Hort Mann Foundation, the nonprofit founded by top New York City-based collectors Susan and Michael Hort in 1995 to honor their late daughter, also appears to be owed just over $100,000. The Hort Foundation did not immediately respond to a request for comment.

“The creditor list can be incomplete on the filing date,” says Adam Stein-Sapir, a bankruptcy expert at Pioneer Funding Group in New York. “They are required to file a more complete list within 45 days.”

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