The Coming Annie Leibovitz Fire Sale

Annie Leibovitz, perhaps the highest-paid celebrity photographer in the world, is profoundly broke. She hocked every photograph she's ever produced and now the high-end pawnshop that gave her $24 million has filed suit to force her to sell it all.

Art Capital Group is a financial firm that specializes in lending money for people who own valuable art. They're happy either getting back in cash or taking the art. Leibovitz, whose financial difficulties have been well-documented, mortgaged her homes and all her photographs to Art Capital and yesterday they filed suit for breach of contract, claiming she won't cooperate in their attempts to sell her pictures.

Art Capital has loaned Leibovitz a total of $24 million since September of last year. They took as collateral the negatives and copyright to all of Leibovitz's photographs, as well as her homes in Rhinebeck, N.Y., and Greenwich Village. But they also extracted from her, according to a lawsuit filed today by Art Capital, both an agreement to sell her archives to repay the loan and the exclusive rights to arrange the sale. And they claim that she is refusing to honor that agreement, frustrating their attempts to sell the photos and refusing to allow real estate agents into her homes.

The suit isn't over the debt, per se. The original loan, according to the suit, was premised on the likelihood that Leibovitz was eventually going to have to sell her archives in order to repay the debt by this September, when it comes due. And according to a sales agreement signed by Leibovitz and included in the suit, Leibovitz agreed to let Art Capital "identify buyers," "solicit offers," and "consummate such sales."

The Coming Annie Leibovitz Fire Sale

The Coming Annie Leibovitz Fire Sale

But so far, Leibovitz has refused to cooperate. Art Capital took physical custody of Leibovitz's negatives when it made the loan, so it wouldn't have any trouble selling those to recover some of the money if it wished. But the real money is in the intellectual property rights to Leibovitz's portfolio, and for that, it needs her cooperation to get the most value.

"The agreement with her was that they'd go out and sell it for more than $24 million," says a source close to Art Capital. "And now, she's not making herself available. Any likely buyer would say, 'Gee, can I meet with Annie?' I don't think anyone would buy it if they don't feel they have a cooperative seller."

Leibovitz's refusal to cooperate raises the question of whether she ever intended to pay Art Capital back, or whether she has already surreptitiously sold the archive using another agent. Her relationship with Art Capital began to go south in March, when Getty Images announced that it was taking on Leibovitz under a "a special multi-assignment collaboration." It's unclear what that means, but Getty's release implies that Leibovitz's "name and talent" had been added to the company's "roster of elite photographers available for commission photography."

That was a surprise to Art Capital, who, according to the suit, thought Leibovitz had pledged them the "right of first refusal to act as agent in connection with...the engagement by third parties of photographic services" provided by her—a way of hedging against the loan by at least getting commission on any of Leibovitz's photos. According to a source close to the deal, Leibovitz didn't inform Art Capital of the Getty arrangement.

Art Capital's suit seeks to compel Leibovitz to honor the contract and help the company sell her photos and homes. It also claims she owes "hundreds of thousands of dollars" in bills associated with the deal.

Leibovitz's attorney declined to comment. The suit is silent on how much, if any, of the $24 million she owes Art Capital has been paid back, though it's highly unlikely that the company would move forward to force the sale if Leibovitz had made much of a dent in what she owes. So no matter what happens with the suit, she's almost certainly deep in a hole with no clear way out aside from the sale.

In May, one of Leibovitz's other creditors, a lighting company that claimed she owes them $189,000 prepared a petition for involuntary bankruptcy against her, which would turn the decision over a sale of her assets over to a bankruptcy judge. The petition hasn't been filed yet, and a lawyer for the company didn't immediately return phone calls, but today's suit may well increase the likelihood that Leibovitz is forced into bankruptcy.

Read the whole complaint here.