Lehman's Louvre, on the Auction Block

If Lehman Brothers had been half as smart about mortgage-backed securities as it was about art, the firm might still be in business. Instead, it's in the midst of a court-ordered liquidation that will include an auction of more than 400 contemporary artworks by Sotheby's (BID) on Sept. 25. Many pieces have skyrocketed in value since they were purchased; the total haul could exceed $10 million, which would pay off less than 0.1 percent of the $15.5 billion owed creditors around the world.

The most desirable booty comes from the collection of Neuberger Berman, an asset management firm that Lehman acquired for more than $2.6 billion in 2003. Neuberger bought pieces by young talents and midcareer names—meaning the sale will be studded with artists whose prices have spiked over the last decade, such as John Baldessari and Takashi Murakami. The firm rarely paid more than $20,000 per piece, and some values have soared to around $1 million. Julie Mehretu's Untitled 1, bought for $21,726 in 2001, is expected to pull in $800,000.

In 1994, Neuberger paid well under $100,000 for a sculpture called We've Got Style (The Vessel Collection—Blue/Green). Its creator was a struggling artist named Damien Hirst. Hirst's bright-blue cabinet filled with ordinary household objects was a critique of consumerism and a poke at collectors' vanity. Today it should fetch up to $1.2 million.

Lehman's trove was spread mainly among its New York locations, though former Chief Executive Officer Dick Fuld's office was reportedly devoid of expensive art—surprising, since he and his wife are major collectors. (Kathleen Fuld is a MoMA trustee.) Shortly after Lehman's collapse, the Fulds sent their postwar drawings to be auctioned off at Christie's in New York, causing a firestorm by dumping art on the market so soon after the company tanked. Although their pieces earned $13.5 million at auction, they charged Christie's the full $20 million it had guaranteed for the sale. Those Lehman guys really know how to play the art market.

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