Chinese art collector’s US$1.3 million lawsuit lifts the veil on back-door contracts for purchase and resale of coveted artworks

Michael Xufu Huang, a well-connected Chinese art collector and museum founder, bought art for another collector under a deal that fell apart, a lawsuit claims

The suit has shone a spotlight on private deal-making in the art market and has seen the defendant’s lawyers accuse Huang of being an ‘art flipper’

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Michael Xufu Huang at the X Museum in Beijing. A well-connected art collector, Huang is suing another collector on whose behalf he bought art for a commission, thereby lifting the lid on private deal-making in the art market. Photo: Simon Song

Bloomberg

Published: 7:15pm, 14 Jan 2022

A lawsuit has dragged the discreet negotiations of the top-tier primary art market into the public spotlight.

According to the suit, Michael Xufu Huang, a prominent Chinese art collector and socialite, had a financial agreement with Monaco-based Argentinian collector Federico Castro Debernardi.

The nature of the deal was that Debernardi would use Huang to buy difficult-to-secure artworks. Huang would purchase the pieces in his own name, then quietly resell them to Debernardi for a 10 per cent commission.

The two collectors settled on the arrangement, documents submitted as evidence in Miami-Dade County circuit court in the US state of Florida show, because Huang had access to choice works that Debernardi did not.

A sales agreement between Michael Xufu Huang and Monaco-based Argentinian collector Federico Castro Debernardi for the sale of an artwork by Cecily Brown, Faeriefeller. Huang’s purchase of another Brown painting led to the breakdown of an arrangement between the pair, documents submitted to a US court say.

That’s because art galleries don’t operate like department stores: works by hot artists are often reserved for collectors who have an ongoing relationship with the artist’s gallery – effectively, they’re reserved as a type of reward for repeat business.

Additionally, selling works to museums is preferable to selling works to collectors. Not only is prestige associated with an artist’s work being hung in a museum, it also means the work won’t soon be resold on the secondary market.