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Paul Sumner, who co-founded Mossgreen in 2004.

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Sumner, who co-founded the auction house in 2004, told ATG: “This is personally and professionally devastating to me and my wife because of the effect it is having on staff, creditors and clients.”

Administrators at accountancy firm BDO have begun the process of an orderly wind-down of the business, but it will also consider a sale of the firm and is seeking expressions of interest from potential buyers.

Around 400 people and businesses are owed money by the Australian auction house and gallery firm after it went into administration in December 2017. Mossgreen, set up by Sumner and his wife Amanda Swanson, has assets of about Aus$3m (£1.7m) and debts of Aus$12m (£7m).

The firm’s primary investor, businessman Jack Gringlas, is thought to be the biggest creditor, owed more than Aus$5m. It is reported that two vendors are owed more than Aus$1m.

The New Zealand business, Mossgreen Webb’s (acquired in 2015), is in liquidation and is also up for sale.

No client account

A client account, known as a trust account in Australia, is not thought to have been in place and Sumner said it is not required by legislation.

He said: “What happened here could happen to other businesses. There are lessons to be learned here by other auction houses.”

Sumner added: “This was a voluntary action that we chose to do to clear up the balance sheet, not to harm or not honour clients and vendors. It is still my intention that vendors will get 100 cents in the dollar.”

“We have never traded insolvent and we had an agreed plan that did not come to fruition

It is believed the firm’s near 50 staff will lose their jobs and reports in Australian media suggest creditors may just get 20 cents in the dollar for money owed. All vendors who have consigned goods to Mossgreen for sale will be contacted and arrangements made for the return of their possessions.

Sumner added: “While I have been made redundant, I am continuing to work without pay to ensure that vendors have property returned and creditors are looked after as best as possible.

“We have never traded insolvent and we had an agreed plan following voluntary administration that, due to changing circumstances beyond my control, did not come to fruition.”

BDO said the closure of the business is “extremely disappointing to all parties affected by it”, adding it will be “working with staff, vendors, creditors and other stakeholders to ensure that the impacts of closure are minimised”.