Completion Bond

A completion bond, also known as a completion guarantee, is an insurance policy used in film and media production to guarantee the completion of a project on time and within the agreed budget. This guarantee is issued by specialized insurance companies, known as completion guarantors, and serves as security for investors and financiers.

Legal classification

1. insurance law: special form of surety or guarantee insurance 2. contract law: complex contractual relationships between producer, guarantor and financiers 3. copyright law: possible transfer of rights in the event of takeover by the guarantor 4. international law: often cross-border contracts for international co-productions

Functionality

1. risk analysis: thorough examination of the project by the completion guarantor 2. conclusion of contract: agreement between producer, guarantor and financiers 3. monitoring: ongoing monitoring of the production process by the guarantor 4. intervention: the guarantor can intervene in production in the event of problems 5. payment: In extreme cases, assumption of additional costs or repayment to investors

Application areas

1. feature film productions 2. high-budget TV series 3. elaborate documentaries 4. animated films 5. international co-productions

Advantages

1. risk reduction for investors and financiers 2. facilitation of project financing 3. professional project management and monitoring 4. potential cost savings through efficient risk management 5. facilitation of complex and high-risk productions

Disadvantages and challenges

1. costs: premiums can be considerable (typically 2-6% of the budget) 2. restriction of creative freedom: possible intervention by the guarantor 3. complexity: complex contract drafting and negotiations 4. time required: intensive due diligence processes before contract conclusion 5. dependency: potential loss of control in the event of problems

Special features of the German film market

1. less widespread than in Anglo-Saxon countries 2. increasing importance in international co-productions 3. interaction with German film funding systems 4. adaptation to German jurisdiction and contractual standards

Bonding process

1. preliminary review: initial assessment of the project and the producers 2. due diligence: detailed review of the script, budget, schedule and team 3. contract negotiation: definition of terms and premiums 4. production monitoring: regular reports and checks 5. finalization: release of the guarantee after successful completion

Current developments and trends

1. digitalization: adapting to new production and distribution technologies 2. streaming platforms: New requirements due to changing production models 3. COVID-19 pandemic: Increased importance of insurance against production interruptions 4. Globalization: Increasing complexity in international co-productions

Legal and practical challenges

1. jurisdictional conflicts in international productions 2. definition and delimitation of “force majeure” events 3. data protection aspects of production monitoring 4. copyright issues in the event of takeover by the guarantor

Conclusion

The completion bond is an important instrument for minimizing risk in film and media production, which is used in particular for large and complex projects. It facilitates financing and offers security for investors, but also entails additional costs and potential restrictions. In Germany, the completion bond is becoming increasingly important, especially for international co-productions. The future of this instrument will be significantly influenced by the development of the global media landscape, new production and distribution models as well as legal and economic conditions.