Questions Asked More Than Once: The Completion Guarantor
Questions Asked More Than Once will be a new sub-section of the E/S Collab. Blog. There are the generic FAQs and then there are those very specific questions that are often asked too late into the game. In an attempt to unriddle the important business stuff, we’re publishing those questions asked more than once and the answers we’ve given more than once. To be clear, posts in this series won’t be diving too deep and will be limited to a simple Q&A style.
1. What is a Completion Guarantor?
A completion guarantor (also referred to as a '“bond”) is a company that guarantees to the financiers of a project that the project will be completed in accordance with the agreed budget, schedules and any specific elements (e.g. a specific director will direct, certain roles will be completed with certain performers). Completion Guarantors make no guarantee the project will achieve any commercial success, or be of a particular quality, only that the film will be completed as agreed upon in the Completion Guarantee Agreement (i.e. the agreement between the Completion Guarantor, the producer and the financiers). A Completion Guarantor is ultimately engaged for the benefit and protection of your financiers.
2. So, a Completion Guarantor is like insurance?
Nope. In a way, they’re akin to insurance for the financiers (i.e., your financiers are guaranteed that the project will be completed and delivered), but no, Completion Guarantors are not insurers.
3. How much should I budget for a Completion Guarantor?
It’s always most accurate to get a direct quote, but on average 2% of the total budget.
4. Will a financier ask me for a Completion Guarantor?
Depends on your project, its format, the creatives involved and their level of experience. It’s safe to always budget for a completion guarantor and if they’re not needed, then great! A small percentage of the budget just freed up for the wrap party.
5. Will a distributor ask me for a completion guarantor?
Unless they’re putting up an advance, it’s unlikely - particularly distributors won’t just care about the project being completed, but also the quality of work and its ability to generate revenue (which is is in conflict with that Completion Guarantors are and aren’t guaranteeing - see Question 1’s answer). But again, it’s always good to be conservative, so, see our answer to Question 4 above.
6. Why do I need to worry about the strike price being met?
If you have a Completion Guarantor working with you, the strike price is the amount that they determine is needed to produce, complete and deliver the project in accordance with the Completion Guarantee Agreement. The responsibilities of the Completion Guarantor only kick in once the full amount of the strike price is actually made available to the production.
7. What is the difference between the delivery date and the bonded delivery date?
The delivery date is when the producer is required to provide all “deliverables” i.e. all items listed in your distributor’s delivery schedule, to the distributor as set out in the applicable distribution agreement. A bonded delivery date is the date by which the Completion Guarantor guarantees the deliverables as set out in the Completion Guarantee Agreement will be delivered. The delivery date can be earlier or the same date as the bonded delivery date, but will never be after it. It’s always good to have a bit of a buffer between those two dates.
8. How do I find a Completion Guarantor?
Google! Many will come up. But the most commonly used Completion Guarantors in our experience are Film Finances Inc and Cinefinance.
Disclaimer: This post should not be construed as legal or commercial advice and we recommend that you obtain independent advice before entering into any financing or completion guarantee documents. E/S Collab. makes no warranty or representation that this information is exhaustive, complete or accurate.