Titanic was. So was Waterworld. Heck, even The Adventures of Baron Munchausen was. Blockbusters? No. Oscar winners? Wrong again. Yet these three films do share one unfortunate characteristic-- each of these pictures was over budget, drastically in some cases. Although caused by different forces and cured by different individuals, each film eventually forced someone to pay a great deal of money unexpectedly. Like many unforeseen expenses, these too can be insured against. Enter stage right, a completion guaranty company.
Any and all film productions financed by non-producer third parties should have a completion guaranty. In the most fundamental terms, a completion guaranty does exactly what its name implies-- it guarantees that a film will be completed and delivered to the distributor by a certain date. In furtherance of this promise, the completion guarantor has the contractual authority and obligation to: 1) compel the producer to complete and deliver the film and advance any sums in excess of the budget required by the producer to do so, 2) take over production herself and complete and deliver the film, or 3) abandon production and repay the financier out-of-pocket expenditures plus interest with respect to the film up to the contractually established limit of liability.
Understanding the detailed operations of a completion guaranty requires a base knowledge of the underlying film transaction. The simplest form of film financing involves four major players: producer, distributor, financier, and guarantor.
James W. Coupe,
Guarantying a Hit (or Miss): Understanding the Completion Guaranty Business in Hollywood,
2 Vanderbilt Journal of Entertainment and Technology Law
Available at: https://scholarship.law.vanderbilt.edu/jetlaw/vol2/iss2/1