Why Producers May Go Bankruptcy Next – The Hollywood Reporter

Who believes that Rust – the Alec Baldwin movie that suspended production a week ago after the film’s cinematographer fatal shot on set in New Mexico – will finally be finished and released? The question is not the most important after the accidental tragedy. Still, this informs the calculation of what is to come.

Most observers may not care about the millions of dollars invested in this independent film. Very few of them envision what it would be like for a member of the cast and crew to go back to set and complete a western that would have been roughly halfway through production before the crash of the 21st of October. Instead, most forward-looking reports speculate on the possibility of criminal charges and the potential for civil lawsuits. The film’s producers hired Brandon Fox at Jenner & Block to investigate.

“If the facts, the evidence and the law support the charges, then I will prosecute at that time,” Santa Fe District Attorney Mary Carmack-Altwies said at a press conference on Wednesday. . “I don’t make rash decisions and I can’t rush to judge.”

But the choice of whether to end or drop the movie could very well play a part in how it all comes together. All productions begin with multiple risk assessment cycles. Investors should consider the possibility of a clawback, while even the most optimistic growers buy insurance if something goes wrong.

Rust was no exception, and the movie’s insurance policy will likely cover at least part of the closing bill and possibly even the costs of defending and settling negligence claims. (Some insurers exclude raw negligence. That’s a whole different discussion.) But there is certainly a limit, and that’s why many banks that lend money for film and television production require a completion bond.

Also known as completion guarantees, completion bonds act almost like umbrella insurance policies to fill in gaps and bring production to the finish line.

Several sources tell Hollywood journalist this Rust struggled to secure a completion bond, which is not unusual as premiums can be expensive – and which has become even less unusual amid the pandemic and resulting production shutdowns.

A representative for Rust did not refute THR ‘s and pointed to a statement which read: “We have suspended production of the film for an indefinite period and are fully cooperating with all inquiries and inquiries.”

But while the film struggled to secure a completion bond, the lack of a financial savior also means those with a stake in the Rust the business – those who put in the money (the budget would have been $ 7-8 million), those who owed money – can look at whatever is left in the bank account as well as any meager proceeds. insurance and try to position yourself for an exit. Especially with the civil claims that are also looming.

The math might be different if this movie had a decent prospect of finishing and possibly being sold to a distributor. It seems unlikely, although it is true that The crow finished production after the infamous accidental filming on set that claimed the life of star Brandon Lee and did well at the box office. But that 1994 film was much closer to the end of production when Lee was killed, had already generated a hype, and was only released in theaters because Harvey Weinstein’s Miramax stepped in as a distributor after Paramount. Pictures has withdrawn.

As for Rust, Michael Davis, partner of DTO Law, says: “If they don’t have the capacity to capitalize, rather than face 12 different procedures, they may want to file for bankruptcy and cede control to an independent trustee. They will always be witnesses and material parts, but there may be advantages here. “

Chapter 7 liquidation for the production vehicle not means a rock-solid liability shield, as these inexperienced producers could be personally named in any lawsuit, but this decision could at least face any mismanagement claim while distinguishing secured creditors from unsecured creditors. It could even lock up the legal center of the tragedy (i.e. after the criminal investigation is complete).

As for the broader implications, there has already been a gun review on set, but some lawyers are skeptical that such a move would prevent the kind of negligence that may have been at play here. “I don’t know if I expect that when the dust clears there will be systemic changes,” says Andrew Hurwitz, co-chair of the Frankfurt Kurnit Entertainment Group.

Hurwitz believes, however, that producers and financiers can take a closer look at the need for completion guarantees. “If you plan on not having a bond, you can think twice,” he says, before acknowledging that insurance companies will reassess risk as well. “The premiums could go up.

The biggest studios will bear the expense, but the world of independent cinema could be significantly affected if non-union crews and non-exhaustive insurance become non-existent for financiers.

About Michael Sauers

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