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The Hollywood Reporter: Security Interests - A Must-Have For Copyright Co-Owners In Uncertain Times (Guest Column)

O’Melveny counsel Evie Whiting and associate Ashleigh R. Stanley co-authored this article on how copyright co-owners can utilize security interests—legal designations that indicate a party has high-priority protected rights to certain property—to mitigate their risk in a challenging time for the entertainment industry.

“Many companies are treacherously poised at the mouth of bankruptcy, tenuously tethered by low interest rates,” Whiting and Stanley write. “What happens to a party who co-owns a copyright with a company that declares bankruptcy?”

“The good news is co-owners do not have to be hapless bit players in the bankruptcy drama,” they continue. “Co-owners can arm themselves against some of the particularly loathsome bankruptcy outcomes by obtaining a security interest on rights and obligations under the co-production agreement governing the creative property (including in the underlying copyright).”

The most significant benefit of establishing a security interest, the authors note, is that the trustee is disincentivized from rejecting the underlying co-production agreement and selling its rights to an unwanted third party.