In this case, the damage appeared to have been caused by the frame standing in a wet area. The gesso had become friable at one end, and the clay and gilding gone from that area. The concern with water damage is whether the rest of the gesso has been compromised.
The glue holding the joint together had also dissolved, so the first step was to re-glue and clamp this joint. The liner was gessoed, smoothed, and a grey clay applied.
|Grey clay applied|
As it would be difficult to have a graceful transition, the entire liner was re-gilded with 22K. After burnishing, a light distressing, then shellac applied.