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Art collector faces very modern problem: Mountains of debt

Art collector faces very modern problem: Mountains of debt

© Rebecca McAlpin for the Wall Street Journal

St. Louis insurance executive Donald L. Bryant Jr. pumped his fist in Sotheby’s hushed New York saleroom when he won a $37 million Gerhard Richter streetscape six years ago. His third wife, Bettina Bryant, soon felt something closer to dread.

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Mr. Bryant didn’t know it yet, but he had Alzheimer’s disease, and he didn’t have the cash to pay for the 1968 view of “Cathedral Square, Milan.” The couple had to take out several loans, including one collateralized by 13 works by artists like Ellsworth Kelly and Jasper Johns. They also got an advance from Christie’s in exchange for auctioning off a Willem de Kooning later that year. For Ms. Bryant, a former ballerina and art adviser, it was an education.

These days, the whole art world is getting a crash course in leverage—and worries are growing that cases like the Bryants’ could prove a tipping point for banks and borrowers alike amid an increasingly skittish art market.

The family’s holdings, at one point valued at more than $300 million, represent one of the world’s greatest private collections of postwar American and German art. They are encumbered with more than $90 million in art-backed loans, and with the 77-year-old Mr. Bryant no longer able to weigh in, Ms. Bryant, 52, has been doing everything she can to make monthly interest payments totaling around $300,000. Last year, she sold a vacation home in Indian Wells, Calif., and she is squeezing as much income as possible from the couple’s Napa Valley winery.

She said she has “more than adequate assets” to meet her financial obligations and hopes to keep the collection largely intact. Yet works from the group have turned up for sale at art fairs this fall, including a Christian Schad portrait of a woman in Richard Nagy’s booth at the European Fine Art Fair in New York last month.

As Mr. Bryant’s disease progresses, his three grown children from prior marriages have criticized Ms. Bryant’s decision to move him to a California estate, far from old friends and family in St. Louis. Fresh tensions broke out earlier this year when the Bryants were sued by a former adviser, Lauren Ridenhour, who claimed she was fired without pay for questioning a financial statement Ms. Bryant planned to submit to lenders to refinance the art loan.

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Ms. Bryant said she is taking good care of her husband. As for Ms. Ridenhour, Bryant Vineyards countersued the former employee for alleged breach of confidentiality, saying she was fired for being “not just incompetent, but a fraud.”

“She was creating a picture that looked like the end of the world,” Ms. Bryant said of Ms. Ridenhour. She said the loan at the center of it all closed smoothly earlier this spring.

Today’s art-backed loans have gotten larger and riskier for collectors as the art market has started to shrink. U.S. collectors staked their art to borrow up to $24 billion this year, more than double the level a decade earlier, according to the latest data compiled by the Deloitte accounting firm and ArtTactic, an auction-database company. Some affluent borrowers tap their art like a piggy bank to fund living expenses. Others use the loans to buy more art.

But after a four-year rise, the global art market has started to retrench, with the value of sales down 22% at Christie’s auctions in the first six months of 2019 compared with the same period a year earlier. Last week’s $1.4 billion major fall auctions in New York were a third smaller.

If art values plummet, experts say, collectors may need to sell works for less than they are valued to pay down their loans—or add more pieces to their collateral pool to keep their loans square. If not, they could default on loans and forfeit their art altogether.

“If everyone is taking the same art as collateral—same artists, same bodies of work—and there’s a crisis, everyone may need to sell and you have a big problem,” said Adriano Picinati di Torcello, who issued the Deloitte-ArtTactic report last month.

Lenders typically extend credit of up to half a work’s value, but some are starting to take a harder line. Mitchell Zuckerman, who started Sotheby’s art-lending arm in 1988, said if he were asked to lend against an $80 million Andy Warhol today, the most he would be willing to lend is $20 million.

For decades, Mr. Bryant managed his art-related risk better than just about anyone, friends said. He earned his fortune founding an insurance firm, the Bryant Group, that designs benefit and estate plans for executives. He was among the first big collectors to experiment with tax-savvy art arrangements, and his deal-making freed up cash that he often funneled back into other pieces, continually upgrading his collection of modern and contemporary art.

He has donated at least 16 works to New York’s Museum of Modern Art, where a gallery bears his name, and 16 more to the St. Louis Art Museum. He owns a 1932 Picasso and a 1949 Jackson Pollock along with other pieces by Rachel Whiteread, Brice Marden and Louise Bourgeois.

“Don always said, ‘Why would I keep money in the bank when I could use it to get more art?’” his wife said.

If he had plans for his art, Ms. Bryant, who serves as his power of attorney, won’t discuss them because she thinks it’s in poor taste to talk about his legacy while he’s alive. He hasn’t revealed much to his children. His daughter, Christina Bryant, said their family endured extended periods of estrangement made worse by his disease. “None of us know what his wishes are,” she said.

Mr. Bryant may have followed his namesake father into the life-insurance business, but friends said he was determined to be his own, self-made man, as his lifelong motto—“Think big. Talk big. Do big”—attests. Born in 1942, the eldest of four children in St. Louis, he kept a paper route, got a law degree and founded a company in 1975 that made him a multimillionaire before he turned 40.

Tall and outspoken, he cut a swath through St. Louis society. He bought a hillside winery overlooking Lake Hennessey in Napa Valley in 1988 and set out to cultivate Cabernet Sauvignon grapes.

His art collection technically started around the same time when his second wife, a local kindergarten teacher named Barbara Murphy, admired a Pierre Bonnard painting, and he bought it for her birthday.

In 1996, he paid $3.7 million for a Willem de Kooning from 1948, “Mailbox,” a swirling painting he could arguably resell for $45 million today, according to loan documents. He sensed that Ellsworth Kelly’s monochrome shapes were equally undervalued and started buying examples now deemed iconic. He bought a drippy Jackson Pollock, “Number 18, 1949,” that might fetch as much as $35 million today. Artists such as Mr. Kelly, Robert Ryman and Richard Serra started visiting him in St. Louis.

His ascent was capped off in 2001, when he was asked to become a MoMA trustee. “Being on that board was his dream,” said his younger son, Justin Bryant. “That was it for my dad.”

Around this time, he took out a roughly $30 million art-backed loan with Bank of America, using funds like a credit line to bid big during peak auction seasons and paying down the sum regularly, according to two people with access to his finances at the time.

When he asked Barbara for a divorce in 2006, he paid his legal fees in part by privately selling an Ellsworth Kelly totem sculpture, according to a person who helped arrange the sale. He bought a $10 million duplex in New York, spending another $4 million in renovations, he later told The Wall Street Journal, and decorated it with pieces by Mr. Serra and Mr. Johns.

Early in 2007, he got a call from Bettina Sulser, an art-world acquaintance he met years earlier through her longtime boyfriend, dealer Larry Gagosian. She and the dealer had recently split up. Long retired from dancing with the American Ballet Theatre company, she had an art-history degree from Columbia University. She asked if she could meet him to propose managing his collection. He took her to dinner at Blue Hill, a farm-to-table restaurant in the West Village, and they started dating instead.

Christina Bryant, like her two brothers Derek and Justin, was still grieving her parents’ divorce when her father called a few months later to tell her his new girlfriend was moving in with him.

“What’s her name?” she asked him. He laughed and told her he “had trouble remembering it,” she said.

In early 2009, banks were reeling amid the recession, and credit for art loans tightened. Mr. Bryant’s bank asked him to pay the balance of his loan—which by then stood at $62 million—or sell a piece in his collateral to show he could achieve liquidity if the economy kept sinking, according to two people familiar with the matter.

He consigned an Alberto Giacometti bronze sculpture of a waving “Hand” to Christie’s, where it carried a $10 million estimate. It sold for $25.8 million.

Point proven, he shifted the loan to JPMorgan Chase & Co., and seemingly overnight his loan capacity stretched to $90 million, then $100 million and at its peak, $110 million, according to court filings.

When Mr. Bryant married his girlfriend in early 2009, he was 66 years old and “full steam ahead, just going, going, going,” she said. The ceremony was held in a Napa Valley meadow on a hill, and the guests included his eldest son, Derek, and the art-world elite, including Ellsworth Kelly and MoMA’s director, Glenn Lowry. The newlyweds had plans to travel and spend more time on art and wine, she said.

Soon after he retired from his insurance firm in 2010, friends and relatives said, Mr. Bryant’s behavior took troubling turns. At a garden party held at MoMA, Mr. Bryant had an outburst where he allegedly made anti-Semitic remarks; soon after, he was asked to step down from the board, according to his daughter, his second wife and another person with close ties to the board.

His daughter said that such remarks would be “shockingly uncharacteristic” of him, and she wondered at the time if he had suffered a nervous breakdown or stroke.

Bettina Bryant said she didn’t know anything about that incident but did say her husband is “very outspoken, and he doesn’t sugarcoat anything.” She said the decision for him to leave the board was mutual. A spokesperson for the museum confirmed he resigned in October 2011 but declined to comment further.

The following spring, Mr. Bryant’s son Justin was walking across the stage at Wake Forest University to get his diploma. He spotted his father sitting in the front row among students, instead of with parents and guests. He looked for his father afterward but didn’t find him.

That night, Mr. Bryant called Justin’s brother, Derek. He told his son he had attended Justin’s ceremony but was livid because Justin hadn’t actually graduated. Derek told his father he had seen Facebook photos of Justin getting his diploma, but Mr. Bryant remained baffled.

That summer, Mr. Bryant’s sister, Becky Hubert, asked him to get tested for Alzheimer’s, a disease that had claimed the life of their mother, his sons said. When the Alzheimer’s diagnosis came in from the Mayo Clinic the following year—after he’d won the Richter he had to pay for with borrowed money—relatives were told he was already beyond the early stages.

Bettina Bryant said her husband was “stoic” about the news and started executing plans he had made earlier. In early 2014, he named her president of his winery and moved back to St. Louis, selling their New York apartment at a loss of around $1 million. He started meeting his children for dinners, at one point bringing a bag of framed photos to a meal with his daughter, Christina.

“He was trying to reconcile,” Christina said, resolving to visit him more often. By the following year, she said, he could no longer remember her name.

His wife said she had begun creating an archive for his collection and overseeing loans of works to museums.

She also said she found a way to “help improve our relationship” with MoMA: In late 2015, Mr. Bryant transferred the remaining fractional interests he had in 16 works he had promised years earlier to the museum, including “Bushbaby” by Mr. Johns, Richter’s “Court Chapel, Dresden,” and Luc Tuymans’ “Lumumba.”

On April 6, 2016, she said, Mr. Bryant also signed over his power-of-attorney to her, and shortly thereafter she signed a three-year renewal of his loan from JPMorgan. The loan was capped then at $100 million and backed by 25 works appraised at around $200 million, according to loan documents and appraisers.

Two months later, his physician, Dr. Mark Gregory, called the family to a meeting where he told them Mr. Bryant had begun to deteriorate quickly, several in the meeting later said. At that time he could no longer speak and had difficulty swallowing.

Ms. Bryant moved him later that fall to a $14 million home she had just renovated near their winery in California, where she lined up nursing care, masseuses and a chef. The children said they were initially told he would only spend the winter out West, but by the following spring, they realized the move was permanent—and they squared off.

“As soon as he couldn’t speak up for himself, she moved him far away,” his daughter said.

Ms. Bryant said the mountaintop setting is buoying Mr. Bryant’s health. She also said she pays for the children to visit whenever they ask, an offer they confirm.

After Ms. Bryant exercised her power of attorney to sell one of their father’s favorite paintings, a late Jasper Johns’ “Target” to her ex-boyfriend Mr. Gagosian, the children obtained a copy of the power-of-attorney document and began to doubt the authenticity of their father’s handwriting. Ms. Bryant said he signed it.

“It does not resemble the signature I recall,” Derek Bryant said.

They’ve also begun keeping close tabs on a lawsuit filed in March in New York federal court by Ms. Ridenhour, a New York-based banker who was hired by the Bryants in 2014 to help sort out the couple’s finances. The lawsuit alleges that Ms. Bryant painted an overly rosy picture of her husband’s finances in a document she was preparing in 2018 to present to lenders to refinance the $100 million art credit.

Ms. Ridenhour said she told Ms. Bryant it was implausible that the winery’s value had somehow increased by $25 million, to $125 million, in the previous nine months, even though sales were falling, the filing said. The lawsuit also alleges Ms. Bryant misrepresented her winery’s sales as profits by failing to subtract expenses. Instead of being allowed to correct the financial snapshot, Ms. Ridenhour said in the filing, she was dismissed last fall by Mr. Bryant’s irrevocable trust. Ms. Ridenour believes she’s owed at least $400,000 for her work on the art loan, the amount she was paid for a previous refinancing she oversaw that she said saved the Bryants around $3 million in interest payments.

Thomas Corbett, who oversees the trust along with Ms. Bryant and Mr. Bryant’s sister, declined to comment on the lawsuit, saying he felt it was “inappropriate to delve into matters that invade the privacy of Mr. Bryant—a living and seriously ill individual—and Ms. Bryant, the only person whose utmost concern in life is to care for him.” Mr. Corbett is also a partner in Mr. Bryant’s longtime legal counsel, Thompson Coburn LLP, in St. Louis.

As for her husband, he can be found nestled in a secluded home in St. Helena, Calif., surrounded by some of the art he spent his lifetime acquiring. Ms. Bryant hung up a work by German artist Neo Rauch, “The Offering,” in their living room. Years ago, Mr. Bryant bought their other Rauch. It’s called “Sanatoriums,” and it’s also collateral.


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