The business & commerce landscape may be littered with the remains of companies that succumbed to the economic recession, but New Orleans Auction Galleries, which has filed for Chapter 11 bankruptcy, is assuring consignors they are not one of them.

On April 1, 2011, attorneys representing the revered Louisiana auction house petitioned the U.S. Bankruptcy Court for the Eastern District of Louisiana to allow New Orleans Auction Galleries (NOAG) protection against creditors under the provisions of Chapter 11 Bankruptcy law. Chapter 11 Bankruptcy enables a company to restructure its debt under the strict guidance of the court. Only the court can issue approval of outgoing payments or further incurrence of debt by the petitioner, once Chapter 11 has been filed.

Auction Central News spoke with Attorney Stewart F. Peck of Lugenbuhl, Wheaton, Peck, Rankin & Hubbard, the law firm representing NOAG in its bankruptcy proceedings. Attorney Peck said the proposed plan for the restructuring of NOAG’s debt would allow for all consignors, including those still owed from past auctions, to be paid in full.

“Everything is subject to court approval, but the prognosis is good,” Peck said. “There are a couple of really major friends out there who want to support us. A very well known local man, Eric Aschaffenburg, has stepped in and offered to be a ‘dip lender.’ He has formed a business, Aschaffenburg Assets LLC, that is prepared to make a $300,000 loan to New Orleans Auction Galleries. The loan will provide a cash injection to give us liquidity.” Peck said the loan is expected to receive final approval at a court hearing on April 28.

Ashaffenburg, NOAG’s angel lender, is from a prominent New Orleans family that owns The Ponchartrain, an independent living facility for well-heeled retirees that, in its earlier incarnation, was a hotel favored by celebrities such as Truman Capote, Frank Sinatra and Tennessee Williams.

Peck explained that, under the terms of the bankruptcy, consignors and vendors are to be classified separately. “Subject to court approval, consignors, including unpaid consignors from January auction, would be paid 100% of what they are owed. That's what our goal is. Those who have consigned to the Major Estates Auction coming up this weekend (April 9-10) will be paid from monies kept segregated for that purpose only.”