John McNaughton’s first Hollywood horror story–the ordeal he had to go through to get his low-budget first feature out of limbo and into distribution despite a prohibitive X rating–is well-known among local film people. When Henry: Portrait of a Serial Killer finally made it into theaters, it had already been an underground hit for years, its reputation made on the circulation of bootleg tapes. Chicagoan McNaughton was able to get work on the basis of that unreleased film–was even considered a hot prospect–but if he thought his movie-business problems were behind him, he soon learned otherwise. His second feature, The Borrower, has been plagued with its own agonizing series of delays. Completed more than two years ago, it begins its commercial release tonight at the Music Box.

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The film’s knotty history goes back to April 1987, when Atlantic Releasing Corporation, a subsidiary of Atlantic Entertainment Group, made a bid to distribute Henry that fell through when the MPAA handed down the X rating that made it unreleasable. At the time Atlantic and Kushner-Locke, a production company that worked in low-budget television shows like Divorce Court, were developing an original script by Sam Egan about an alien who sets down in LA and “borrows” people’s heads in order to survive. McNaughton was asked to direct it, and preproduction began in August 1987. Three weeks in, Atlantic exec Bill Tennant began voicing doubts that the movie could be made under the $2 million ceiling that had been set for it. Atlantic halted preproduction, commissioned a feasibility study, and asked McNaughton to shoot the first three pages of the script to see if it could be done on budget.

“I was being paid by Kushner-Locke. I had an apartment and a car, and I finally finished this three-minute piece. By this time it was the holiday season, and I told them I wanted to go home for the holidays. They said, ‘Fine, just give us the keys to your apartment and car, and don’t come back.’ This was after not having paid me for eight weeks. I went to New York, and the next day Bill Tennant [from Atlantic] called me and said, ‘We saw the test, and we like it, and we’re trying to get this property away from Kushner-Locke.’ They asked if I was still interested in directing it, and I said yes.”

“I really liked Julio. He and his crew didn’t have a hack mentality, and Elliot Rosenblatt didn’t understand anything else.”

The Music Box even paid the $1,500 necessary for Cannon to acquire a new print, because there were only two worn-down work prints they could have shown otherwise. “I don’t think anyone at Cannon has even watched the film from beginning to end. I don’t understand their motives, but they could make some nice money off of this film,” McNaughton says. Cannon has sold the video rights to Warners Home Video, which is planning an October 23 release.