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Judge Tours Embattled Salander-O'Reilly to Ensure Art's Safety

By Philip Boroff

Oct. 22 (Bloomberg) -- New York Supreme Court Justice Richard Lowe III toured Salander-O'Reilly Galleries today with some of the lawyers involved in nearly two dozen claims against the gallery and proprietor Lawrence Salander. The tour was aimed at inspecting the art and making arrangements to keep it safe.

In a hearing on Friday, the judge ordered the Italianate five-story townhouse closed indefinitely. The suits against the gallery and Salander seek the return of tens of millions of dollars and accuse Salander of defrauding clients, failing to remit proceeds of sales of art on consignment and reneging on debt.

Salander has declined to discuss all the allegations. On Friday, one of his lawyers, David Mollon, said a bankruptcy filing is likely.

Lowe toured the gallery with Mollon and other lawyers, including lawyers representing hedge-fund manager Roy Lennox, of Caxton Associates LLC, and Renaissance Art Investors, an entity associated with New York investor Donald Schupak.

``The judge was looking to see that everything was under safeguard,'' Barry Slotnick, who represents Renaissance, said in an interview outside the gallery, on East 71st Street.

The lawyers and Lowe agreed to permit a gallery employee to regularly inspect the art and to make sure Salander-O'Reilly's humidifier is working, Mollon said in an interview. The gallery is under 24-hour surveillance by court-ordered private guards stationed outside.

A representative of RFR Realty was also on the tour. Led by developer and art collector Aby Rosen, RFR has accused Salander- O'Reilly in a lawsuit of being consistently late on its $154,000 monthly rent and $29,000 in real-estate taxes. RFR's complaint seeks the gallery's eviction.

In court papers, Salander conceded that he has been late with the rent since he leased the mansion, in December 2004. He said RFR wants him out to sell the building or lease it to another tenant who will pay more.

Richard Farley, an RFR executive, declined to comment.

To contact the writer of this story: Philip Boroff in New York at pboroff@bloomberg.net.

Last Updated: October 22, 2007 16:28 EDT

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