INVESTING IN HOLLYWOOD OBTAIN AND REGISTER SECURITY INTERESTS    A security interest gives the secured party rights in designated collateral. A bank, for instance, has a security interest in the form of a mortgage when it disburses a home loan. If the house is sold, the bank loan must be repaid from the proceeds. In the movie and television industry, film lenders may want to secure their financial interests by obtaining a security interest in certain collateral, such as the film negative and master materials. Likewise, investors may want to make sure the filmmakers protect their rights by having distributors grant the filmmaker or production entity a security interest. The collateral here is the proceeds derived from exploitation of the film. By having a security interest, the filmmaker will have superior rights to unsecured creditors. If a distributor goes bankrupt, its assets will be auctioned off to pay the distributor’s creditors. One of the distributor’s assets may be the right to distribute your film, and any revenue generated from this right. If the moviemaker has a security interest, then proceeds derived from it will be paid to the moviemaker first, as a secured creditor, before payment is made to the distributor’s unsecured creditors (e.g., the office supply store). It is important not only to have a written security agreement, but also to record it. The distribution agreement should have a clause granting the moviemaker a security interest. A separate long and short form security agreement is also signed by the parties, as well as a UCC-1 form which is signed and recorded with the Secretary of State where the collateral or distributor is located. The security interest should also be recorded with the Copyright Office at the Library of Congress in Washington, D.C. If you are not knowledgeable about security interests, it is advisable to retain an attorney to assist you. back