TORONTO -- For a long time, it looked like director Paul Schrader was digging himself into a deep, deep ditch while making "The Canyons."

After all, a widely read, schadenfreude-thick New York Times story earlier this year portrayed a troubled film production held hostage by the persistently erratic behaviour of star Lindsay Lohan. The film seemed to feature every necessary element of a roadside disaster ripe for rubbernecking: a squabbling production team headlined by discontent screenwriter Bret Easton Ellis; a practically mutinous, oft-unpaid crew; and a 67-year-old director hanging precariously by a thread as robust as dental floss.

It's thus surprising when, reached seven months after that piece was published, Schrader seems so positive about his supposed bomb-to-be. The boundary-testing screenwriter of "Taxi Driver" and "Raging Bull" and director of "American Gigolo" says the momentum has shifted in favour of his micro-budget erotic thriller. "The Canyons" has struck a distribution deal with IFC Films, found entry into the upcoming Venice International Film Festival and merited a splashy premiere at New York's Lincoln Theater.

As far as Schrader is concerned, everything is going according to plan.

"The first storyline is Bret and Paul make the movie. The second is the Lindsay Lohan horror show. And the third story behind the film is: 'Hey, it's pretty good after all,"' the two-time Golden Globe nominee said in a recent telephone interview.

If that really is the unlikely ending to this convoluted tale, it will validate a series of Schrader's decisions that he's joked had others in Hollywood questioning his sanity.

The journey began when Ellis and Schrader became frustrated after funding for two previous projects disappeared. Schrader subsequently suggested that they -- along with producer Braxton Pope -- fund "The Canyons" themselves, telling Ellis: "What you do -- which is beautiful people doing bad things in nice rooms -- is not that expensive."

Each of the three creatives behind the movie contributed $30,000 of their own money, and they funded the rest of the film's $250,000-plus budget via the crowd-sourcing website Kickstarter after auctioning off prizes including a personal lunch with Schrader ($4,999) and a moneyclip given to the writer-director by Robert De Niro on the set of "Taxi Driver" ($10,000).

"The Canyons" is a pitch-black, sexually graphic film about a love triangle between three lost Los Angeles souls. James Deen, a porn star with no dramatic acting experience, portrays Christian, a dead-eyed trust-fund kid producing a horror film out of aimless boredom (he was cast after interacting with Ellis via Twitter over Schrader's objections, which proved short-lived).

His girlfriend Tara is portrayed by Lohan (who demanded the starring role after being initially approached for a supporting turn), while Vancouver's Nolan Gerard Funk plays Ryan, an actor whose past relationship with Tara and still-simmering passion for her sends the trio down a path of deceit and, eventually, violence.

As documented in the Times piece, the involvement of Lohan -- the notoriously troubled actress whose 90-day sentence in a lockdown rehabilitation centre was to end this week -- brought the film an endless series of complications. Fired and re-hired by Schrader before filming even began, Lohan was reportedly frequently absent from set, clashed with Schrader and her co-stars while trying to assert influence over the movie's content and occasionally arrived unfit for filming.

It was even reported that persuading Lohan to the shoot the film's climactic four-way sex scene required Schrader to strip naked himself, a charge the film veteran didn't deny.

"It all happened very fast," he said, a note of amusement in his voice. "We were already shooting before the crew really realized that I had done this, to call her bluff. So it wasn't quite as dramatic as the Times made it sound."

He has other misgivings about that much-discussed article, arguing that tumult on a film set is actually "standard operating procedure."

"It's crisis and ad hoc decisions and melodrama and arguments -- that's part of the fun of making a movie.... Non-professionals typically equate a troubled production with a troubled film, when in fact, those two things are not really the same. A lot of great films have a lot of production troubles and a lot of films that really worked smoothly were awful.

"Also," he added, "Lindsay tends to hijack everything she touches so it started to become an article about that."

Lohan certainly made Schrader's life difficult for the duration of production, and yet the film veteran has an obvious fondness for the once-promising 27-year-old star of "Mean Girls" and "Freaky Friday" even as he frankly discusses her shortcomings.

"She lives in a kind of cone of drama," he said. "There were times when the drama was really unnecessary. You say, 'Why does she put herself through this? Why are we having this kind of tension? We don't really need this."'

And yet, "once the camera starts rolling, she has that kind of thing."

Further, Schrader has made it work with worse.

"(She) wasn't even the most difficult (actor) I've ever worked with," he says with a rueful chuckle. "I found Richard Pryor was more difficult, because with Richard, race always got involved and that makes it ugly. And I think George (C.) Scott was probably as difficult or more difficult because of his alcoholism.

"It's not like I haven't been there."

Funk also had praise for Lohan, even though the chiselled 27-year-old star of "Glee," "Awkward" and the upcoming Vin Diesel-led spectacle "Riddick" really had no reason to be so charitable to the actress.

As was reported, when Lohan arrived (hours late) for the film's first rehearsal, it was observed that the actress had crossed Funk's name out on her script and scrawled in the names of several possible replacements for the fledgling Canadian actor. He said he "tried not to let that wig (him) out."

"Believe me, when you see the letters 'NO!' in capital letters with an exclamation point next to your name, you're like: 'Whaaaat?"' he recalled with a laugh. "I don't know why that was ever written there, I teased her about it later, and that was kind of it. She's got a good sense of humour, man.

"People ask me, would you work with her again?" he added. "Yeah. I'd rather work with someone who's kind of eccentric than work with someone who's boring, who doesn't want to be there."

Everyone involved in the film did want to be there, Funk added, and it's not like they could have been motivated by money.

The cast was paid $100 a day for their work, with promises in some cases for a share in the film's profits. Producers didn't pay for hair, makeup or transportation, Schrader says, and relied heavily on the contributions of film students who participated in the production in exchange for experience and a class credit. Broken Social Scene's Brendan Canning provided the film's music, chosen in part says Schrader because the Toronto native was unaffiliated with a major label at the time and could thus work for a deferred salary. The rest of the crew worked largely on a similar basis.

Schrader says they will in fact be paid, because the film is already in the black financially. He's clearly thrilled with the film's fortunes, and Funk raves about its newfound "really positive buzz." Schrader insists that Ellis, who has been publicly critical of the film and complained about Schrader's sensibilities overruling his own, is also pleased with the final product, and he dismisses the "Less Than Zero" author's complaints as a "little cover" he says the writer used to distance himself from the film when it looked like it wouldn't succeed.

Even Lohan, who was reportedly angry over the amount of screentime wrested by Deen, has come around and is "very high" on the movie, Schrader says. He's been texting with the actress during her rehab stint and says she's looking forward to promoting the film in Venice.

Knowing what he now knows about the unreliable starlet, he says he'd still sign up to work with her again without hesitation.

"I think she's in a very good place. I think she has a real shot," he said. "But I would work with her even if she was still troubled. Because she's worth it.

"You can shoot around misbehaviour. But you just can't shoot around lack of charisma."

"The Canyons" opens theatrically Friday in Toronto and will be available elsewhere via video-on-demand.