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The Globe and Mail

Auction house Ritchies forced into bankruptcy

The troubled Toronto-based Ritchies Auctioneers has been pushed into bankruptcy by its landlord, who is claiming the 42-year-old company is indebted to her for nearly $131,000.

The application to order bankruptcy, filed on Oct. 6 by landlord Hildegard Hammer, was granted yesterday morning in Ontario Superior Court of Justice (bankruptcy and solvency). M. Rea Godbold of Grant Thornton Ltd. in Toronto was affirmed as trustee in bankruptcy on behalf of Mrs. Hammer, wife of Toronto automotive dealer and investor Richard (Dick) Hammer, and, as of yesterday, all creditors. (Mrs. Hammer and her husband were out of the country yesterday and not reachable for comment.)

As a result of the order, Ritchies, which has been in financial distress since at least July, has had to close and lay off staff to permit the trustee to change locks and alarms at 380 King St. E. and take possession of the two-storey property. Notices of the bankruptcy were posted on the exterior of the premises yesterday afternoon, and, at 5:15 p.m. EDT, consignors and creditors were instructed at to address all queries to Mr. Godbold.

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According to court documents, Ritchies has a single secured creditor, Fleet Street Financial Corp. of Toronto, owed approximately $300,000. Unsecured creditors are reported to have claims totalling at least $1.5-million.

In July, Ritchies was reported to have failed to pay, as contracted, an estimated $750,000 owed to consignors whose works of important Canadian art were auctioned on May 25 at 380 King St. E. in association with Sotheby's. The company's chief financial officer, Fraser Elliott, resigned in late June, followed by the departure of Stephen Ranger, the president, chief operating officer and sole minority stakeholder, on July 28, and the dismissal on July 31 of 27 full-time employees, including senior vice-president Gabrielle Peacock.

While Sotheby's later paid consignors to the May sale, the consignors to an auction held in early June have yet to be paid an estimated $1.2-million. In an online letter to these consignors posted on Sept. 1, Ira Hopmeyer, Ritchies' chairman, chief executive officer and sole majority stakeholder, said the company was "in the process of attempting to determine a go-forward plan. As such, a decision on the monies owed to you will be made on or before Oct. 15, 2009, at which time we will let each consignor know by letter sent to you by that date."

However, no resolution occurred by that date. Ritchies, in the meantime, limped along with a skeleton staff, holding a two-day miscellany sale last month conducted by Sterling Bailiffs/Platinum Liquidations at the behest of Fleet Street Financial. Fleet Street is reporting that all consignors to this auction were paid earlier this month. A sale scheduled for Oct. 21 and 22 was cancelled.

In the past three months, allegations have been exchanged over who is to blame for Ritchies' condition. Michael Yasny, president of Fleet Street, has sided with Mr. Hopmeyer in his claim that Mr. Ranger, Mr. Elliott and others are at fault after making a failed bid to buy Mr. Hopmeyer's 89.9-per-cent stake earlier this year. Mr. Ranger has alleged that his "salvage" of Ritchies was made untenable by Mr. Hopmeyer's refusal to pay more than $1.2-million in "shareholder advances." (Mr. Ranger said he relinquished his 10.1-per-cent interest in Ritchies to Mr. Hopmeyer upon his resignation in July.)

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