Somerhill Gallery, 303 S. Roxboro St., Durham, will hold a going-out-of-business sale Friday, Sept. 17, and Saturday, Sept. 18. The gallery will auction any fixtures and remaining artwork that it owns Sunday, Sept. 19, at 4 p.m. The gallery will close after the auction.

For the past two weeks, artists have pulled their trucks and campers and cars into the back parking lot of the Venable Building in Durham and pulled their paintings, sculpture and other works out of Somerhill Gallery.

The gallery, which declared Chapter 7 bankruptcy last month, received approval to auction off what little it owns and close on Sept. 19, a U.S. Bankruptcy Court judge ruled Tuesday.

However, artists’ consigned work that remains in the gallery is safe from creditors and will not be auctioned. According to a 1983 state law, the Artists’ Consignment Act, creditors of an art dealer have no right to consigned works or their proceeds.

“Most of what the debtor sells belongs to someone else,” Sara Conti, the gallery’s trustee in the bankruptcy case, told the court. “I’m satisfied these are true consignments.”

Only if an artist agrees to sell his or her work at the auction can it be sold, Conti said. Unsold artwork will be stored in another location until the artists can be found.

And Conti, not Somerhill President Joe Rowand, who had run the well-known gallery for nearly 40 years, will operate the business.

As the Indy reported in an in-depth story last week, Somerhill owes artists at least $270,000 in commissions on works that were sold as long ago as 2002. Several artists, including Ginny Crouch Stanford, a painter from Sebastopol, Calif., told the Indy they were led to believe that the gallery had not sold their work when, in fact, it had.

It is highly unlikely that Somerhill, which is broke, will pay these artists, even though the buyers of the works had paid the gallery in full.

Somerhill is also more than $200,000 in debt to its landlord, Scientific Properties, plus hundreds of thousands of dollars owed to banks and lenders. Rowand has also filed for Chapter 11 personal bankruptcy.

Approached after the hearing, Rowand told the Indy he had no comment about the gallery’s debts to the artists.

It is unclear why the gallery failed to pay some of its artists, many of whom had been clients of Rowand for decades. But it is clear that the nonpayments weren’t due to poor record keeping. Conti told the court that gallery records “are meticulous” and that each artist has a portfolio. “There is nothing sloppy about it,” she said.

The gallery’s five employees, who earn $10 to $17 an hour, will lose their jobs after the auction. Conti said she would ensure that the workers would be paid for any hours they put in during the gallery’s final days. The framing shop would also continue to operate until the auction because the gallery has billed $21,000 to clients for work being done there.

Store fixtures such as cabinetry will be included in the auction, but little else. The gallery’s customer list, Conti said, will not be sold. “One of [Somerhill’s] great assets is its clientele. It’s been an institution that has cultivated wealthy, discerning connoisseurs of art,” Conti said. “It probably does have some value and so does the name ‘Somerhill.’”

One of the notable moments in Tuesday’s bankruptcy hearing was Scientific Properties’ argument that Rowand’s monthly $15,000 salary, which he paid himself from the gallery, was excessive in light of the significant debt Somerhill had accrued. And until recently, Rowand continued to earn that amount. Conti told the court that she stopped payment on Rowand’s last check to himself. “Rowand will no longer be paid by Somerhill,” Conti said. “He will work for me but not get a paycheck.”

This article has been further clarified to reflect that the auction is on Sept. 19; Somerhill will close and plans to vacate the premises Sept. 20.