The settlement warranty (sometimes referred to as bond settlement ) is a form of insurance offered by a guaranteed settlement company (in exchange for a percentage fee on a budget basis) which is often used in independently financed films to ensure that the producer will complete and deliver the film (based on scripts, cast and approved budget) to the distributor so as to trigger the payment of the minimum distribution guarantee to the producer (but it is accepted by the bank/investor who has cash at a discount) trigger production).
The producer will agree to provide the film (based on the script/cast/budget agreed) to the distributor in respect of a particular area in consideration (inter alia) for the payment of the "minimum distribution guarantee" to be paid at the time when the producer has submitted the completed film. Manufacturers obviously need these funds in advance to finance the film so that the producer takes the distribution contract signed to the bank/finance and will effectively use it as collateral against the production loan. At this stage the bank will require a settlement bond to be executed to give them the required level of security against the risk of absenteeism by the producer. The parties that complete the bond agreement are usually the producer, the lender, the surety settlement company, and the distributor.
This funding method can be complicated and expensive because it is legal, bank fees and interest. The cost of the bond itself is negotiable - usually 3-5% depending on the risk assessed by the guarantor of completion. For this reason, completion bonds are typically used on independent, medium- and high-cost films.
The key to completing the risk assessment process of the guarantor company will be a careful supervision of key people in the production team to determine if the film is "bondable". Of particular interest is the director, first assistant director, line producer, production manager, producer, player and cinematographer, as these personnel will ultimately be responsible for keeping production within budget and on schedule.
A guaranteed settlement will require regular paper production lines (usually daily) - for example, production reports, cash flow and cost reports, etc. Under the bond agreement, the guarantor of the settlement has a contractual right to "take over the film" (which will include the right to "hire and fire" a broad range of personnel including its directors because they are financially responsible if the film exceeds the budget.In extreme situations, completed by the guarantor company (this is very well known during the Thief and the Cobbler production) - a traumatic event for crews and players, and can be disastrous for the creative and commercial ambitions of the film. also know that they usually have an interest in working with established production teams to help them return production to the schedule and within an agreed budget.
Video Completion guarantee
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Source of the article : Wikipedia
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