Producer George Litto has initiated arbitration proceedings against French insurance AXA Re for revoking two insurance contracts to provide the funding for five films.
According to Litto's complaint, George Litto Pictures (GLP) obtained two lines of credit from Chase Manhattan Bank worth more than $100m. The issuance of each loan was contingent on the existence of supporting insurance which AXA assumed to protect Chase in the event of any shortfall.
When GLP sought the shortfall insurance on the first film The Crew, AXA revoked its contract with GLP which resulted in Chase terminating its financing for the five-picture deal.
The complaint, which was filed with the American Arbitration Association in Los Angeles, emphasises the problems inherent in insurance-backed film funding, a relatively new financing technique which looks to be already on its last legs. The expensive insurance deals insure the performance of slates of films enabling independents to raise more finance than they could normally access. But sizeable claims from Phoenix Pictures and now GLP have caused many insurers such as AXA to retrench.
GLP is seeking damages for economic loss, consequential economic damages, damage to reputation and emotional distress as well as punitive damages to punish AXA for its conduct. Litto claims that AXA "arbitrarily and maliciously withdrew its collateral without any prior consultation with GLP."
Litto will be at Cannes selling remaining territories on The Crew which will be released by Buena Vista this summer. Also at Cannes Litto plans to meet with international film players in an attempt to refinance his company.