A motion picture completion guaranty is a written contract that guarantees a motion picture will be finished and delivered on schedule and within budget. The majority of films produced and fully financed by the major Hollywood studios are, in effect, self-guaranteed. However, most independently financed films, including many that are released and distributed by the major studios, require a completion guaranty. The completion bond marketplace has consolidated in recent years and the remaining surety companies will not consider a submission under $5,000,000 without an equal amount of collateralization.
A producer usually secures a completion bond guaranty for the benefit of the bank or other financiers who agree to make the necessary production funding strike price available to the producer.
In general, a completion bond guaranty assures banks and financiers that:
- The producers will complete and deliver the film in keeping with the screenplay, budget and production schedule that the bank or financiers approved; or
- The completion guarantor will complete and deliver the film in keeping with such pre-approved screenplay and production schedule, and advance such sums in excess of the pre-approved budget necessary to do so; or
- In the event production of the film is abandoned, the completion guarantor will fully repay all sums invested in the film by the bank or financiers.