 The
Agreements
A completion guaranty is issued to guarantee
that a motion picture (or television production) will be completed
and delivered on time to the distributor within budget and in accordance
with the script and on schedule. In essence the guaranty is a surety
bond and provides that if the project runs into problems, the guarantor
will either advance funds to the producer in order to finish the
film, take over the project and complete it itself; or abandon the
film and repay the financier the production financing it may have
advanced.
The guaranty is an instrument that protects the financier from issues
raised by over-budget costs, misapplication of the production financing
and various other problems that may arise through production and
post production of the motion picture.
In motion picture financing, the completion guaranty is an especially
valuable aspect of the financier’s collateral package. It
provides the financier with the necessary comfort that the motion
picture will be completed and delivered or alternatively, that the
financier will be repaid directly by the completion guarantor for
its exposure.
The bond document itself is the agreement between the guarantor
and the financier. This is a fairly straightforward contract that
outlines the obligations of the guarantor to complete and deliver
the film, or to abandon the production and repay the financier.
It contains information regarding the financing of the picture and
the total amount of funding that is required. It is signed by the
guarantor and each beneficiary covered under the guaranty.
A second contract, the producer’s agreement, is the most important
document to the guarantor because it outlines the obligations of
the producer in working to produce the film, and the rights of the
guarantor to ensure that it will be in a position to complete and
deliver the motion picture in accordance with the completion guaranty
that it issues to the financier.
The guarantor is typically very involved with every aspect of a
film’s production to minimize the risk of overages or abandonment.
The producer’s agreement requires that the production furnish
information about the film’s progress so that the guarantor
may monitor costs and schedule to ensure that the production is
proceeding on target.
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