„Production Continuation Fund“ for movies finally in force

15.09.2020

This is what the German audiovisual industry has been eagerly waiting for: On September 11, the Commissioner for Culture and the Media’s Covid relief fund came into effect. It aims to provide EUR 50 million in compensation for losses caused by production interruptions and stoppages for feature films and “high-end series”.

The directive, initial application forms, and FAQs are available on the website of the German Federal Film Board, including a non-binding English translation. The English title is “Production Continuation Fund” (the “Fund”) although the fund bears no resemblance whatsoever to a completion bond. It is rather comparable to a relief fund known from other countries.

What does the Fund cover?

The Fund covers productions stopped up to June 30, 2021 in Germany or abroad during their “risk phase,” i.e., in the last four weeks of preproduction and during the original shooting period.

The Fund covers feature films and series productions that are funded under the DFFF 1 program or the German Motion Picture Fund. TV productions without federal funding, for which a “Covid relief Fund II” is currently being discussed, are not included. The Fund can also not be used for TV series funded by the GMPF where the production company has neither contributed to the financing nor retains any rights.

The Fund is managed by the German Federal Film Board (FFA). Its compensation payments are granted as a subsidy and are non-repayable. There is no entitlement to receiving the payment; the FFA will decide on a discretionary basis.

How much are the FFA’s payments?

The amount of the FFA’s payments depends on the federal subsidy funding that was received for the production at hand: if the federal subsidy funding is more than 50% of the total amount of all public subsidies, the FFA pays up to 95% of the recognized loss, capped at the cost of production or EUR 1.5 million, whichever is lower. If the amount of federal subsidy funding is less than 50% of the total amount of all public subsidies, the FFA will only pay up to 50% of the recognized loss, capped at 50% of the cost of production or EUR 750,000, whichever is lower. In any event, 5% of the loss has to be borne by the production company, at a minimum of EUR 10,000. The FFA's payments under the Fund may be cumulated with payments from the German states for COVID-19 losses as long as a total of EUR 1.5 million is not exceeded. The FFA may also make payments upfront, particularly in the event of liquidity bottlenecks that put the completion of the production at risk.

However, compensation payments under the Fund are subsidiary to “other payment claims”of the production companies, e.g. from insurance companies. Possible payment claims against co-producers should not be covered by this provision, i.e., they would not trigger the Fund’s subsidiarity. The Fund is also subsidiary to benefits from guarantee and contingency funds of other countries for COVID-19 losses.

How can I claim payments from the Contingency Fund?

Proper registration is required to benefit from the Fund. Registration may be submitted by any production company that is eligible to apply for subsidies; the applicant for the Fund need not have received federal funding as long as he/she would generally be eligible to apply for subsidies for the relevant production. The application must be submitted three weeks prior to the start of the above-mentioned risk phase and includes the submission of extensive documentation, such as compliance with the usual hygiene standards and various contractual additions with cast and crew as well as service providers. Many production companies will have to perform additional work in this context. It is welcome news that productions that had already started by September 11 will also benefit from the Fund for future COVID-19 losses if they submit an application up to ten weeks after the Directive has entered into force, i.e. by November 20.

The “Product Continuation Fund” that has now entered into force is an important and welcome step, even if the measures fail to reach the scope of other countries, e.g. the UK. Better late than never, especially since the measure also covers projects that are already in production. A solution is still urgently needed for TV productions that have not received federal subsidy funding, because there can only be hope for the stalled production boom to continue when a Covid relief fund applicable to those productions comes into force.

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