Creditors Are Chasing Bankrupt Auction House Paddle8’s Former CEO for Allegedly Mishandling Funds to the Tune of $1 Million

A group of creditors who are owed money by the floundering
online auctioneer Paddle8 are targeting former CEO Valentine
Uhovski, alleging that he demonstrated a “reckless regard for his
duties.”

Paddle8 filed for Chapter 11 bankruptcy protection in the
southern district of New York in March, one week after the
nonprofit New American Cinema Group sued the company for failing to
turn over the proceeds of art sold at a charity auction.

The creditors are took legal action against Uhovski on May 1,
seeking an approval from the court to pursue claims against
him.

“I’m shocked because I was not aware of any lawsuit, especially
this hurtful claim,” Uhovski told Artnet News in an email. “For
months, I and all former Paddle8 staff members have been tirelessly
fighting for the partners and a brand that we love. I’m still in
touch and in unity with most of them. I left the company in
February after months of deceit and misinformation. These lies and
blaming techniques will not be tolerated by me, or the
organizations that continue to be mistreated by the former
owners.”

According to the creditors’ complaint, during his tenure as CEO,
Uhovski “engaged in acts of gross mismanagement and disloyalty,”
including misappropriating funds from the auctions to cover the
company’s operating expenses.

As a result, the papers point to one nonprofit that consigned
artwork to Paddle8 for an online auction, presumably referring to
the New American Cinema
Group. That sale included works donated by artists John
Ahearn, Kiki Smith, Tom Otterness, Jim Jarmusch, and Walter
Robinson, among others. But, according to the organization’s
lawsuit, it had still had not received the funds from Paddle8
months after the sale. Meanwhile, collectors had started calling to
inquire about the whereabouts of works they purchased at the
auction.

“Paddle8’s pattern of conduct in withholding, and apparently
misappropriating, funds that belong to a non-profit is very
troubling,” Paul Cossu, a pro bono attorney for the cinema
organization, told Artnet News in an email at the time. “As an
auction house, Paddle8 “has a fiduciary obligation to hold and
safeguard such funds in trust for its consignors.” A week later,
the company filed for bankruptcy protection.

Uhovski, formerly the CEO of Tumblr, was appointed the head of
Paddle8 in November, but resigned just a few months later, in
mid-February. His predecessor, Izabela Depczyk,
also resigned as CEO
after two years.

The new complaint alleges that, in January 2020, Paddle8’s board
of directors instructed Uhovski “to scale back business operations,
cut expenses and conduct reductions in force.” He was then expected
to present new budgets at a planning meeting in Florida, but never
showed, according to the court papers. Uhovski resigned shortly
thereafter.

As a result of Uhovski’s “failing to properly apportion sale
proceeds,” the creditors suffered damages of approximately $1
million,” the papers allege. They are now seeking that amount, plus
interest.

The post Creditors Are Chasing Bankrupt Auction House
Paddle8’s Former CEO for Allegedly Mishandling Funds to the Tune of
$1 Million appeared first on artnet News.