A completion bond is often needed for independent movie financing.
10 May
Hollywood’s Star-Studded California Surety Bonds
This is a guest post by JW Surety, the #1 surety agency in the US. Here they take a look at the completion bond,a surety bond common in California that’s often needed for independent movie financing.
With May in full swing, it’s only a matter of time before summer blockbuster season kicks in at movie theaters. Most of the action-adventure-romance-horror-comedy-thrillers making it onto the big screen are made and produced by Hollywood’s giant studios. However, every now and then a great indie film sneaks up and surprises audiences, outselling even the most widely promoted Vin Diesel sequel.
While studios like the “Big 6” (Paramount, Warner Bros., 20th Century Fox, Touchstone, Columbia and Universal) have more than enough capital to withstand the risk of producing what could be the next big flop, smaller companies don’t have the same luxury. When up-and-coming directors or producers want to get a project off the ground, they generally have to look for outside backers and financiers. These investors, hoping to discover the next Napoleon Dynamite but preparing for the worst, will require a Completion Bond before they start signing checks.
Also known as a Guarantee of Completion, the bond assures investors that the producers will adhere to the film’s screenplay, budget and timeline. Though these bonds are issued by specialty agencies with an expertise in the movie business, they work essentially the same way as all other contract bonds.
Instead of evaluating a contractor’s financial and physical ability to complete a construction project, completion bonding agencies look at the track record of the film’s directors, producers, managers and cast to determine the likelihood of success. Producers with a track record of completing projects on time and on budget will have a much easier time getting bonded (and at a much lower rate) than those constantly making headlines for their on-set shenanigans.
After issuing a Completion Bond, the bonding company essentially takes over the production from an administrative standpoint, requiring regular updates and retaining the ability to hire or fire key personnel should the production fall behind schedule. In the most extreme cases, a Completion Bond company can seize control of a film and take over remaining work to complete the project.
Perhaps the most notorious example of this was Arabian Knight, the 1995 animated equivalent of Disney’s Aladdin. Canadian animator Richard Williams, who won an Oscar for his animation in Who Framed Roger Rabbit, began production on Arabian Knight in 1964, eventually gaining financial backing in the late 1980s. When his 1991 deadline came and went with no finished film in sight, the Completion Bond company overseeing the project seized control of the film. Williams, after spending 26 years developing the film, was removed from his position and replaced by another producer who completed the project in 18 months. An estimated budget of $24 million had been used to create the film, which returned less than half a million in revenue.
Fortunately, most film crews who have enough passion for a project to pursue independent financing are able to follow through on the contractual obligations to complete things on schedule. Completion Bond companies allow financiers to take a chance on smaller productions that could just be the next cult classic.
















