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New York State Appellate Court Ruling Could Siginificantly Impact the Art Finance Market, Financing Transactions Generally

Barton LLP
New York, New York

May 7, 2018, New York, New York – In a case that could have significant impact in the art finance market and in financing transactions generally, a New York State appellate court has ruled that parties cannot assume that their own characterizations of their financing transactions will prevail.

Late last week, in Anatole Shagalov, et al. v. Asher Edelman, et al., the Appellate Division, First Department affirmed that art dealer Anatole Shagalov is likely to prove that his financing arrangement with an affiliate of the financier Asher Edelman, structured by Edelman as a sale and leaseback of several works by the artists Keith Haring and Frank Stella, is actually a collateralized loan transaction. This means that the artwork which Mr. Edelman’s company nominally purchased from Mr. Shagalov may be treated as loan collateral, with significant protections for the borrower under Uniform Commercial Code Article 9, and substantially limiting the lender’s ability to sell artwork to satisfy in the case of any default on loan obligations.

Mathew E. Hoffman, Jason Cohen and Randall Rasey of Barton LLP represented Mr. Shagalov and his company on the appeal. “Those providing financing especially in the art market but actually more broadly will need to be very careful in structuring and drafting their transactions in order to ensure that they are not treated as loans,” said Mr. Hoffman.

About Barton LLP
Barton LLP is a leading commercial litigation and transactional law firm in New York City comprised of an elite team of former partners of “BigLaw” who have joined together to create a firm that has been recognized by Law360 as one of “10 boutiques that have established brands on par with the biggest of firms” who are “capable of competing with – and beating – the best big firms at the highest level.” Also recognized by Acquisition International magazine as “Ones to Watch for 2016: The Best Boutique Law Firms,” Most recently, Law360 recently touted Barton LLP as leading the trend in securing BigLaw partners who are interested in making a lateral move to a firm that offers a more dexterous and desirable platform to practice law. Barton works at the intersection of law and business to provide client access to the legal acumen, business resources and relationships needed for success. For more information, please visit

Barton LLP is a member of The International Society of Primerus Law Firms.

The general information contained herein is intended for informational purposes only. It is not intended to be, and should not be construed as, legal advice or legal opinion on any specific facts or circumstances.

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