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Filmmaking Essentials: Reopening Hollywood, Completion Bonds and Guarantees, Coronavirus - YouTube
Channel: HOLLYWOOD UNAPOLOGETIC! - Filmmaking Essentials
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Want to make movies?
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Hey there, aspiring filmmakers.
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You’re the New Hollywood Generation.
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My name is Orlando Delbert.
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This is ‘Hollywood, Unapologetic!’
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I first wrote about success in filmmaking,
and life, when I was writing, Pollyanna’s
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Tear Soaked Battlefields of Hollywood: A Survival
Guide Against the Cynicism and the Hypocritical.
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Today I wanted to speak about Filmmaking Essentials:
Reopening Hollywood, Completion Bonds and
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Guarantees, and the New Hollywood Generation.
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For you, the New Hollywood Generation, this
directly applies to you.
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If you haven’t watched the episode, Reopening
Hollywood, Entertainment Production Insurance,
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and the New Hollywood Generation, I’ll have
a link at the end of this episode for you
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to check out.
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While I was writing the initial episode on
reopening Hollywood, I decided it would be
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best to produce two episodes on reopening
Hollywood, entertainment production insurance,
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and completion bonds and guarantees.
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I mention completion bonds in the last episode
and want to continue forward from there.
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Completion bonds and guarantees and entertainment
production insurance are two separate and
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important pieces needed for film and television
production.
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Yes, I know these are not the most exciting
topics for many of you.
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They do have a direct influence to one another,
however.
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And both are something you really should know
about and have secured, before shooting a
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single frame.
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As a quick reminder, while a good entertainment
production policy protects the producers,
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your crew, your gear, and the locations you
want to shoot at from liability claims, it
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also is one of the biggest hurdles to overcome
during these Coronavirus pandemic days, after
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the safety-related ones.
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Please keep this in mind because every production
is different and has its own set of needs.
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The same can be said about the insurance industry
and how it works.
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But, with every production hit by the shutdown
at the same time, the insurance industry was
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not designed for it.
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It’s not the model that industry follows.
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The same can be said about completion bonds.
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A completion bond is a guarantee your motion
picture will be completed and delivered to
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the distributor by an agreed upon date.
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The completion guarantee protects the financier
from over-budget expenditures, misappropriation
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of funds, and other problems that may happen
during the production process.
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In the event completion isn’t possible,
the guarantor can either loan the production
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the funds to finish the film, or take it over
and finish it.
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The other option is the production is abandoned
altogether.
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When that happens, the production financing,
interest, fees, and other costs are to be
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reimbursed.
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Once there is a commitment from the distributor
that the financier will be repaid upon delivery,
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it can serve as the collateral for the film
production financing.
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The financier must be prepared to take the
credit risk of the distributors.
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These are details that would be worked out
as part of the financier’s collateral package.
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Oftentimes, the completion guarantor obtains
reinsurance through a third-party insurance
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company.
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This would be a cut-through certificate.
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A cut-through certificate is a statement that
the reinsurer will pay claims.
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These claims would be made within specified
limits in the contract between the reinsurer
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and the completion guarantor.
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This cut-through certificate would be in the
amount to cover all of the production financing,
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including interest, fees, and any other associated
costs.
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At this time as you already know the Coronavirus
pandemic has stopped everything production-related
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in its tracks.
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This has caused completion bond experts, insurance
companies, union representatives, studio executives,
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film producers, and politicians to speak to
one another in finding a way to move forward
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again, but it’s not clear who will take
the bigger hits.
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And from what I’ve just mentioned how the
completion guarantor would obtain reinsurance
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through a third-party insurance company, already
stops the process right there.
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As I’ve mentioned in the last episode, when
forced production shutdowns were implemented,
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multimillion-dollar claims hit their insurance
carriers.
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The Centers for Disease Control and Prevention
has warned us of a second coronavirus wave
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is expected.
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This is relative because as productions get
closer to starting up, these same productions
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may likely be an identified risk, and insurers
will not cover them.
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No insurance company is going to insure a
production against someone potentially contracting
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COVID-19 either.
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As you can see, bank financing is tied to
insurance and completion bonds.
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While the studios have deeper pockets to dip
into, in comparison to the independents, their
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expenditures most likely will double, and
still not get the insurance coverage for COVID-19.
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For independents, however, many will not be
able to afford the additional expenditures.
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Many independent producers are fearful in
the event of another production shutdown;
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they would need to cover it themselves.
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For example, if an actor contracts COVID-19,
production would be forced to stop.
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If the department heads are under contract
to continue to get paid daily, after a few
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weeks can be disastrous for the production
budget.
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The bottom line, anyone working as part of
any film crew has to accept it is a very tightly
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run unit.
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And as I mentioned in the last episode, we,
as members of the New Hollywood Generation
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are all in it together.
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We’re all in close proximity of one another.
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And under normal circumstance, sometimes our
lives are at risk while on the clock.
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Today, the risk is higher.
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And this way of working and living may be
with us for months or even years to come.
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Be safe.
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Be smart.
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Take it all one day at a time.
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And don’t forget to be great!
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I’m going to add a link at the very end
to the episode, Reopening Hollywood, Entertainment
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Production Insurance, and the New Hollywood
Generation.
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If you haven’t checked it out, I think you’ll
dig it.
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Are you ready for the challenge?
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