NY State Assembly Bill A164B

Archive: Last Bill Status - Signed by Governor

Introduced
In Committee
On Floor Calendar
- Passed Senate
- Passed Assembly
Delivered to Governor
Signed by Governor

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Actions

view actions (18)

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Apr 06, 2021	signed chap.94
Apr 01, 2021	delivered to governor
Mar 24, 2021	returned to assembly passed senate 3rd reading cal.523 substituted for s297b referred to judiciary delivered to senate passed assembly ordered to third reading rules cal.43 rules report cal.43 reported reported referred to rules
Mar 11, 2021	print number 164b
Mar 11, 2021	amend and recommit to judiciary
Mar 09, 2021	print number 164a
Mar 09, 2021	amend (t) and recommit to judiciary
Jan 06, 2021	referred to judiciary

Votes

Bill Amendments

Original

B (Active)

Original

B (Active)

A164 - Details

See Senate Version of this Bill:: S297
Law Section:: General Obligations Law
Laws Affected:: Add Art 18-C §§18-400 - 18-403, Gen Ob L
Versions Introduced in 2019-2020 Legislative Session:: A11098, S9070

A164 - Summary

Enacts provisions relating to the discontinuance of LIBOR (the London interbank offered rate); prohibits parties from refusing to perform contractual obligations or declaring a breach of contract as a result of the discontinuance of LIBOR or the use of a replacement; establishes that the replacement is a commercially reasonable substitute for and a commercially substantial equivalent to LIBOR; provides a safe harbor from litigation for the use of the recommended benchmark replacement.

A164 - Bill Text download pdf

 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    164
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                                (PREFILED)
 
                              January 6, 2021
                                ___________
 
 Introduced  by  M.  of  A.  ZEBROWSKI  --  read once and referred to the
   Committee on Judiciary
 
 AN ACT to amend the uniform commercial code, in relation to  the  effect
   of  a  LIBOR  discontinuance  event on contracts, securities and other
   agreements

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  The  uniform  commercial  code is amended by adding a new
 article 12 to read as follows:
                                ARTICLE 12
                           LIBOR DISCONTINUANCE
 SECTION 12-101. DEFINITIONS.
         12-102. EFFECT OF LIBOR DISCONTINUANCE.
         12-103. CONTINUITY OF CONTRACT AND SAFE HARBOR.
         12-104. SEVERABILITY.
 SECTION 12-101. DEFINITIONS.
   AS USED IN THIS ARTICLE THE FOLLOWING TERMS SHALL HAVE  THE  FOLLOWING
 MEANINGS:
   (A)  "LIBOR" SHALL MEAN, FOR PURPOSES OF THE APPLICATION OF THIS ARTI-
 CLE TO ANY PARTICULAR CONTRACT,  SECURITY  OR  INSTRUMENT,  U.S.  DOLLAR
 LIBOR  (FORMERLY KNOWN AS THE LONDON INTERBANK OFFERED RATE) AS ADMINIS-
 TERED BY ICE BENCHMARK ADMINISTRATION LIMITED (OR ANY  SUCCESSOR  THERE-
 OF).
   (B)  "LIBOR  DISCONTINUANCE EVENT" SHALL MEAN THE EARLIEST TO OCCUR OF
 ANY OF THE FOLLOWING:
   (1) A PUBLIC STATEMENT OR PUBLICATION OF INFORMATION BY OR  ON  BEHALF
 OF  THE  ADMINISTRATOR  OF  LIBOR ANNOUNCING THAT SUCH ADMINISTRATOR HAS
 CEASED OR WILL CEASE TO  PROVIDE  LIBOR,  PERMANENTLY  OR  INDEFINITELY,
 PROVIDED  THAT, AT THE TIME OF THE STATEMENT OR PUBLICATION, THERE IS NO
 SUCCESSOR ADMINISTRATOR THAT WILL CONTINUE TO PROVIDE LIBOR;

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                       [ ] is old law to be omitted.
                                                            LBD03775-01-1

 A. 164                              2
 
   (2) A PUBLIC STATEMENT OR PUBLICATION OF INFORMATION BY THE REGULATORY
 SUPERVISOR FOR THE ADMINISTRATOR OF LIBOR,  THE  UNITED  STATES  FEDERAL
 RESERVE SYSTEM, AN INSOLVENCY OFFICIAL WITH JURISDICTION OVER THE ADMIN-
 ISTRATOR  FOR  LIBOR,  A RESOLUTION AUTHORITY WITH JURISDICTION OVER THE
 ADMINISTRATOR  FOR LIBOR OR A COURT OR AN ENTITY WITH SIMILAR INSOLVENCY
 OR RESOLUTION AUTHORITY OVER THE ADMINISTRATOR FOR LIBOR,  WHICH  STATES
 THAT  THE  ADMINISTRATOR  OF  LIBOR  HAS CEASED OR WILL CEASE TO PROVIDE
 LIBOR PERMANENTLY OR INDEFINITELY, PROVIDED THAT, AT  THE  TIME  OF  THE
 STATEMENT  OR PUBLICATION, THERE IS NO SUCCESSOR ADMINISTRATOR THAT WILL
 CONTINUE TO PROVIDE LIBOR; OR 
   (3) WITH RESPECT TO ANY  PARTICULAR  TYPE  OF  CONTRACT,  SECURITY  OR
 INSTRUMENT DESIGNATED BY THE RELEVANT RECOMMENDING BODY, A PUBLIC STATE-
 MENT  OR PUBLICATION OF INFORMATION BY THE REGULATORY SUPERVISOR FOR THE
 ADMINISTRATOR OF LIBOR ANNOUNCING THAT  LIBOR  IS  NO  LONGER  REPRESEN-
 TATIVE.
   (C) "LIBOR REPLACEMENT DATE" SHALL MEAN:
   (1) IN THE CASE OF A LIBOR DISCONTINUANCE EVENT DESCRIBED IN PARAGRAPH
 (1)  OR (2) OF SUBSECTION (B) OF THIS SECTION, THE LATER OF (I) THE DATE
 OF THE PUBLIC STATEMENT OR PUBLICATION OF INFORMATION REFERENCED THEREIN
 AND (II) THE DATE ON WHICH THE ADMINISTRATOR  OF  LIBOR  PERMANENTLY  OR
 INDEFINITELY CEASES TO PROVIDE LIBOR; AND
   (2) IN THE CASE OF A LIBOR DISCONTINUANCE EVENT DESCRIBED IN PARAGRAPH
 (3)  OF SUBSECTION (B) OF THIS SECTION, THE DATE OF THE PUBLIC STATEMENT
 OR PUBLICATION OF INFORMATION REFERENCED THEREIN; PROVIDED THAT, IF  THE
 DATE ON WHICH THE BENCHMARK REPLACEMENT WOULD BECOME EFFECTIVE UNDER THE
 FALLBACK  PROVISIONS OF A CONTRACT, SECURITY OR INSTRUMENT IS LATER THAN
 THE DATE DETERMINED ACCORDING TO THE FOREGOING  PROVISIONS,  SUCH  LATER
 DATE  SHALL BE THE LIBOR REPLACEMENT DATE FOR SUCH CONTRACT, SECURITY OR
 INSTRUMENT.
   (D) "FALLBACK PROVISIONS" SHALL MEAN TERMS IN A CONTRACT, SECURITY  OR
 INSTRUMENT  THAT  SET FORTH A METHODOLOGY OR PROCEDURE FOR DETERMINING A
 BENCHMARK REPLACEMENT, INCLUDING ANY TERMS RELATING TO THE DATE ON WHICH
 THE BENCHMARK REPLACEMENT BECOMES EFFECTIVE, WITHOUT REGARD TO WHETHER A
 BENCHMARK REPLACEMENT CAN BE DETERMINED IN ACCORDANCE WITH SUCH  METHOD-
 OLOGY OR PROCEDURE.
   (E) "BENCHMARK" SHALL MEAN AN INDEX OF INTEREST RATES THAT IS USED, IN
 WHOLE  OR  IN PART, AS THE BASIS OF OR AS A REFERENCE FOR CALCULATING OR
 DETERMINING ANY VALUATION, PAYMENT OR  OTHER  MEASUREMENT  UNDER  OR  IN
 RESPECT OF A CONTRACT, SECURITY OR INSTRUMENT.
   (F)  "BENCHMARK  REPLACEMENT"  SHALL  MEAN A BENCHMARK, OR AN INTEREST
 RATE OR RATES (WHICH MAY OR MAY NOT BE BASED IN WHOLE OR IN  PART  ON  A
 PRIOR  SETTING  OF  LIBOR),  TO  REPLACE  OR SUBSTITUTE FOR LIBOR OR ANY
 INTEREST RATE BASED ON LIBOR FOLLOWING THE OCCURRENCE OF A LIBOR DISCON-
 TINUANCE EVENT UNDER OR IN RESPECT OF A CONTRACT,  SECURITY  OR  INSTRU-
 MENT.
   (G)   "RECOMMENDED  BENCHMARK  REPLACEMENT"  SHALL  MEAN  A  BENCHMARK
 REPLACEMENT, WHICH SHALL INCLUDE ANY RECOMMENDED SPREAD  ADJUSTMENT  AND
 ANY  BENCHMARK  REPLACEMENT  CONFORMING  CHANGES,  THAT  SHALL HAVE BEEN
 SELECTED OR RECOMMENDED BY A RELEVANT RECOMMENDING BODY.
   (H) "RECOMMENDED SPREAD ADJUSTMENT" SHALL MEAN A SPREAD ADJUSTMENT, OR
 METHOD FOR CALCULATING OR DETERMINING SUCH SPREAD ADJUSTMENT, (WHICH MAY
 BE A POSITIVE OR NEGATIVE VALUE OR ZERO) THAT SHALL HAVE  BEEN  SELECTED
 OR RECOMMENDED BY A RELEVANT RECOMMENDING BODY TO BE APPLIED TO A RECOM-
 MENDED BENCHMARK REPLACEMENT FOR A PARTICULAR TYPE OF CONTRACT, SECURITY
 OR  INSTRUMENT  AND  FOR A PARTICULAR TERM TO ACCOUNT FOR THE EFFECTS OF

 A. 164                              3
 
 THE TRANSITION OR CHANGE FROM LIBOR TO A RECOMMENDED BENCHMARK  REPLACE-
 MENT.
   (I)  "BENCHMARK  REPLACEMENT  CONFORMING  CHANGES"  SHALL  MEAN,  WITH
 RESPECT TO ANY CONTRACT, SECURITY OR  INSTRUMENT,  ANY  CHANGES,  ALTER-
 ATIONS  OR  MODIFICATIONS THAT ARE ASSOCIATED WITH AND REASONABLY NECES-
 SARY TO THE USE, ADOPTION OR IMPLEMENTATION OF A  RECOMMENDED  BENCHMARK
 REPLACEMENT AND THAT (1) HAVE BEEN SELECTED OR RECOMMENDED BY A RELEVANT
 RECOMMENDING  BODY  TO  REFLECT THE USE, ADOPTION OR IMPLEMENTATION OF A
 RECOMMENDED BENCHMARK REPLACEMENT UNDER OR IN RESPECT OF SUCH  CONTRACT,
 SECURITY  OR  INSTRUMENT OR (2) WOULD NOT, IN THE REASONABLE JUDGMENT OF
 THE DETERMINING PERSON, RESULT IN A DISPOSITION OF SUCH CONTRACT,  SECU-
 RITY OR INSTRUMENT FOR U.S. FEDERAL INCOME TAX PURPOSES.
   (J)  "DETERMINING  PERSON"  SHALL  MEAN, WITH RESPECT TO ANY CONTRACT,
 SECURITY OR INSTRUMENT, ANY PERSON SPECIFIED AS A  "DETERMINING  PERSON"
 OR,  IF NONE IS SPECIFIED, ANY PERSON WITH THE AUTHORITY, RIGHT OR OBLI-
 GATION TO (1) DETERMINE THE  BENCHMARK  REPLACEMENT,  (2)  NOTIFY  OTHER
 PERSONS  OF  THE  OCCURRENCE  OF  A  LIBOR DISCONTINUANCE EVENT, A LIBOR
 REPLACEMENT DATE OR A BENCHMARK REPLACEMENT OR (3) CALCULATE  A  PAYMENT
 BASED ON A BENCHMARK.
   (K) "RELEVANT RECOMMENDING BODY" SHALL MEAN THE FEDERAL RESERVE BOARD,
 THE FEDERAL RESERVE BANK OF NEW YORK, OR THE ALTERNATIVE REFERENCE RATES
 COMMITTEE, OR ANY SUCCESSOR TO ANY OF THEM.
 SECTION 12-102. EFFECT OF LIBOR DISCONTINUANCE.
   (A)  ON THE LIBOR REPLACEMENT DATE, THE RECOMMENDED BENCHMARK REPLACE-
 MENT SHALL, BY OPERATION OF LAW, BE THE BENCHMARK  REPLACEMENT  FOR  ANY
 CONTRACT,  SECURITY  OR INSTRUMENT THAT:   (1) USES LIBOR AS A BENCHMARK
 AND CONTAINS NO FALLBACK PROVISIONS OR;
   (2) CONTAINS FALLBACK PROVISIONS THAT PROVIDE FOR A BENCHMARK REPLACE-
 MENT THAT IS BASED IN ANY WAY ON ANY LIBOR VALUE.
   (B) FOLLOWING THE OCCURRENCE OF  A  LIBOR  DISCONTINUANCE  EVENT,  ANY
 FALLBACK PROVISIONS THAT PROVIDE FOR A BENCHMARK REPLACEMENT BASED ON OR
 OTHERWISE  INVOLVING  A POLL, SURVEY OR INQUIRIES FOR QUOTES OR INFORMA-
 TION CONCERNING INTERBANK LENDING RATES OR ANY INTEREST  RATE  BASED  ON
 LIBOR SHALL BE DISREGARDED AS IF NOT INCLUDED IN SUCH CONTRACT, SECURITY
 OR INSTRUMENT AND SHALL BE DEEMED NULL AND VOID AND WITHOUT ANY FORCE OR
 EFFECT.
   (C)  FOLLOWING  THE  OCCURRENCE  OF  A LIBOR DISCONTINUANCE EVENT, ANY
 DETERMINING PERSON SHALL BE PERMITTED, BUT SHALL  NOT  BE  REQUIRED,  TO
 SELECT  A RECOMMENDED BENCHMARK REPLACEMENT AS THE BENCHMARK REPLACEMENT
 UNDER OR IN RESPECT OF ANY CONTRACT, SECURITY  OR  INSTRUMENT,  PROVIDED
 THAT  SUCH  CONTRACT,  SECURITY  OR  INSTRUMENT  IS  NOT SUBJECT TO THIS
 SECTION AND PROVIDED  FURTHER  THAT  THE  SELECTION  OF  SUCH  BENCHMARK
 REPLACEMENT SHALL BE IRREVOCABLE AND SHALL BE MADE NO LATER THAN:
   (1)  THE TIME, IF ANY, SPECIFIED IN SUCH CONTRACT, SECURITY OR INSTRU-
 MENT FOR MAKING SUCH SELECTION; OR
   (2) IF NO SUCH TIME IS SPECIFIED IN THE CONTRACT, SECURITY OR  INSTRU-
 MENT,  THE  FIRST  DATE  THAT  IS  AT  LEAST 60 DAYS FOLLOWING THE LIBOR
 REPLACEMENT DATE ON WHICH ANY VALUATION, PAYMENT  OR  OTHER  MEASUREMENT
 UNDER OR IN RESPECT OF SUCH CONTRACT, SECURITY OR INSTRUMENT IS REQUIRED
 TO BE CALCULATED OR DETERMINED BY REFERENCE TO A BENCHMARK REPLACEMENT.
   (D)  THE  PROVISIONS OF THIS ARTICLE SHALL NOT ALTER OR IMPAIR (1) ANY
 WRITTEN AGREEMENT BY ALL REQUISITE PARTIES THAT PROVIDES, RETROSPECTIVE-
 LY OR PROSPECTIVELY, THAT A CONTRACT, SECURITY OR INSTRUMENT  SHALL  NOT
 BE  SUBJECT  TO THIS ARTICLE (WITHOUT NECESSARILY REFERRING SPECIFICALLY
 TO THIS ARTICLE); (2) ANY CONTRACT, SECURITY OR INSTRUMENT THAT CONTAINS
 FALLBACK PROVISIONS THAT, AFTER THE APPLICATION  OF  SUBSECTION  (A)  OF

 A. 164                              4
 
 THIS  SECTION, WOULD RESULT IN A BENCHMARK REPLACEMENT THAT IS NOT BASED
 ON LIBOR (INCLUDING, BUT NOT LIMITED TO, THE PRIME RATE OR  THE  FEDERAL
 FUNDS  RATE);  (3)  ANY  CONTRACT,  SECURITY  OR  INSTRUMENT  SUBJECT TO
 SUBSECTION (C) OF THIS SECTION AS TO WHICH A DETERMINING PERSON DOES NOT
 ELECT  TO  USE  A  RECOMMENDED  BENCHMARK  REPLACEMENT OR THAT PERMITS A
 DETERMINING PERSON TO USE A RECOMMENDED BENCHMARK REPLACEMENT  PRIOR  TO
 THE  OCCURRENCE  OF A LIBOR DISCONTINUANCE EVENT; OR (4) THE APPLICATION
 TO A RECOMMENDED BENCHMARK REPLACEMENT OF ANY CAP,  FLOOR,  MODIFIER  OR
 SPREAD  ADJUSTMENT TO WHICH LIBOR HAD BEEN SUBJECT PURSUANT TO THE TERMS
 OF A CONTRACT, SECURITY OR INSTRUMENT. FOR PURPOSES  OF  THE  FOREGOING,
 "REQUISITE  PARTIES"  MEANS  ALL PARTIES REQUIRED TO AMEND THE TERMS AND
 PROVISIONS OF A CONTRACT, SECURITY OR INSTRUMENT THAT WOULD OTHERWISE BE
 ALTERED OR IMPAIRED BY THIS ARTICLE.
   (E) NOTWITHSTANDING THIS CHAPTER OR ANY OTHER LAW OF THIS STATE,  THIS
 ARTICLE  SHALL  APPLY  TO  ALL  CONTRACTS,  SECURITIES  AND  INSTRUMENTS
 (INCLUDING CONTRACTS, WITH RESPECT TO COMMERCIAL TRANSACTIONS) AND SHALL
 NOT BE DEEMED TO BE DISPLACED BY ANY OTHER LAW OF THIS STATE.
 SECTION 12-103. CONTINUITY OF CONTRACT AND SAFE HARBOR.
   (A) THE USE OF A RECOMMENDED  BENCHMARK  REPLACEMENT  AS  A  BENCHMARK
 REPLACEMENT  UNDER  OR  IN RESPECT OF A CONTRACT, SECURITY OR INSTRUMENT
 SHALL CONSTITUTE:
   (1) A  COMMERCIALLY  REASONABLE  SUBSTITUTE  FOR  AND  A  COMMERCIALLY
 SUBSTANTIAL EQUIVALENT TO LIBOR;
   (2)  A  REASONABLE, COMPARABLE OR ANALOGOUS TERM FOR LIBOR UNDER OR IN
 RESPECT OF SUCH CONTRACT, SECURITY OR INSTRUMENT; AND
   (3) SUBSTANTIAL PERFORMANCE BY ANY PERSON OF ANY RIGHT  OR  OBLIGATION
 UNDER OR IN RESPECT OF A CONTRACT, SECURITY OR INSTRUMENT RELATING TO OR
 BASED ON LIBOR.
   (B)  NONE  OF  (1) A LIBOR DISCONTINUANCE EVENT OR A LIBOR REPLACEMENT
 DATE, (2) THE USE OF A RECOMMENDED BENCHMARK REPLACEMENT AS A  BENCHMARK
 REPLACEMENT  OR  (3)  THE  IMPLEMENTATION  OR  PERFORMANCE  OF BENCHMARK
 REPLACEMENT CONFORMING CHANGES SHALL HAVE THE EFFECT OF (I)  DISCHARGING
 OR  EXCUSING  PERFORMANCE UNDER ANY CONTRACT, SECURITY OR INSTRUMENT FOR
 ANY REASON, CLAIM OR DEFENSE (INCLUDING, BUT NOT LIMITED TO,  ANY  FORCE
 MAJEURE  OR  OTHER  PROVISION  IN ANY CONTRACT, SECURITY OR INSTRUMENT);
 (II) GIVING ANY PERSON THE RIGHT TO UNILATERALLY  TERMINATE  OR  SUSPEND
 PERFORMANCE UNDER ANY CONTRACT, SECURITY OR INSTRUMENT; (III) CONSTITUT-
 ING  A  BREACH OF A CONTRACT, SECURITY OR INSTRUMENT; OR (IV) VOIDING OR
 NULLIFYING ANY CONTRACT, SECURITY OR INSTRUMENT.
   (C) IF A RECOMMENDED BENCHMARK REPLACEMENT  IS  USED  AS  A  BENCHMARK
 REPLACEMENT  OR  A  DETERMINING  PERSON IMPLEMENTS BENCHMARK REPLACEMENT
 CONFORMING CHANGES UNDER OR  IN  RESPECT  OF  A  CONTRACT,  SECURITY  OR
 INSTRUMENT  IN  ACCORDANCE  WITH  THIS  TITLE,  NO PERSON SHALL HAVE ANY
 LIABILITY FOR DAMAGES TO ANY PERSON  OR  BE  SUBJECT  TO  ANY  CLAIM  OR
 REQUEST  FOR  EQUITABLE RELIEF ARISING OUT OF OR RELATED TO THE USE OF A
 RECOMMENDED BENCHMARK REPLACEMENT OR THE IMPLEMENTATION  OR  PERFORMANCE
 OF  BENCHMARK REPLACEMENT CONFORMING CHANGES, AND THE USE OF SUCH RECOM-
 MENDED BENCHMARK REPLACEMENT OR THE  IMPLEMENTATION  OR  PERFORMANCE  OF
 BENCHMARK  REPLACEMENT  CONFORMING  CHANGES  SHALL  NOT GIVE RISE TO ANY
 CLAIM OR CAUSE OF ACTION BY ANY PERSON IN LAW OR IN EQUITY.
   (D) THE USE OF A RECOMMENDED BENCHMARK REPLACEMENT OR THE  IMPLEMENTA-
 TION  OR  PERFORMANCE  OF  BENCHMARK  REPLACEMENT  CONFORMING CHANGES AS
 PROVIDED IN THIS ARTICLE SHALL BE DEEMED TO (1) NOT BE AN  AMENDMENT  OR
 MODIFICATION  OF ANY CONTRACT, SECURITY OR INSTRUMENT AND (2) NOT IMPAIR
 OR HAVE A MATERIAL OR ADVERSE EFFECT ON ANY  PERSON'S  RIGHTS  OR  OBLI-
 GATIONS UNDER OR IN RESPECT OF ANY CONTRACT, SECURITY OR INSTRUMENT.

 A. 164                              5
 
   (E)  EXCEPT  IN THE CASE OF A CONTRACT, SECURITY OR INSTRUMENT COVERED
 BY SUBSECTIONS (A) OR  (B)  OF  SECTION  12-102  OF  THIS  ARTICLE,  THE
 PROVISIONS  OF  THIS  ARTICLE  SHALL  NOT BE INTERPRETED AS CREATING ANY
 NEGATIVE INFERENCE OR NEGATIVE PRESUMPTION  REGARDING  THE  VALIDITY  OR
 ENFORCEABILITY  OF  (1)  ANY  BENCHMARK REPLACEMENT THAT IS NOT A RECOM-
 MENDED REPLACEMENT BENCHMARK, (2) ANY SPREAD ADJUSTMENT, OR  METHOD  FOR
 CALCULATING  OR  DETERMINING  A  SPREAD ADJUSTMENT, THAT IS NOT A RECOM-
 MENDED SPREAD ADJUSTMENT OR (3) ANY CHANGES,  ALTERATIONS  OR  MODIFICA-
 TIONS  TO  OR  IN RESPECT OF A CONTRACT, SECURITY OR INSTRUMENT THAT ARE
 NOT BENCHMARK REPLACEMENT CONFORMING CHANGES.
 § 12-104. SEVERABILITY.
   IF ANY CLAUSE, SENTENCE, PARAGRAPH, SECTION OR PART  OF  THIS  ARTICLE
 SHALL  BE  ADJUDGED BY ANY COURT OF COMPETENT JURISDICTION TO BE INVALID
 AND AFTER EXHAUSTION OF ALL FURTHER JUDICIAL REVIEW, THE JUDGMENT  SHALL
 NOT  AFFECT,  IMPAIR  OR  INVALIDATE THE REMAINDER THEREOF, BUT SHALL BE
 CONFINED IN ITS OPERATION TO THE CLAUSE, SENTENCE, PARAGRAPH, SECTION OR
 PART OF THIS ARTICLE DIRECTLY INVOLVED IN THE CONTROVERSY IN  WHICH  THE
 JUDGMENT SHALL HAVE BEEN RENDERED.
   § 2. This act shall take effect immediately.

A164A - Details

See Senate Version of this Bill:: S297
Law Section:: General Obligations Law
Laws Affected:: Add Art 18-C §§18-400 - 18-403, Gen Ob L
Versions Introduced in 2019-2020 Legislative Session:: A11098, S9070

A164A - Summary

A164A - Bill Text download pdf

 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  164--A
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                                (PREFILED)
 
                              January 6, 2021
                                ___________
 
 Introduced  by  M.  of  A.  ZEBROWSKI  --  read once and referred to the
   Committee on Judiciary -- committee discharged, bill amended,  ordered
   reprinted as amended and recommitted to said committee
 
 AN  ACT to amend the general obligations law, in relation to the discon-
   tinuance of the London interbank offered rate
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  The  general  obligations  law is amended by adding a new
 article 18-C to read as follows:
                               ARTICLE 18-C
                           LIBOR DISCONTINUANCE
 SECTION 18-400. DEFINITIONS.
         18-401. EFFECT OF LIBOR DISCONTINUANCE ON AGREEMENTS.
         18-402. CONTINUITY OF CONTRACT AND SAFE HARBOR.
         18-403. SEVERABILITY.
   § 18-400. DEFINITIONS. AS USED IN THIS  ARTICLE  THE  FOLLOWING  TERMS
 SHALL HAVE THE FOLLOWING MEANINGS:
   1. "LIBOR" SHALL MEAN, FOR PURPOSES OF THE APPLICATION OF THIS ARTICLE
 TO  ANY  PARTICULAR  CONTRACT, SECURITY OR INSTRUMENT, U.S. DOLLAR LIBOR
 (FORMERLY KNOWN AS THE LONDON INTERBANK OFFERED RATE) AS ADMINISTERED BY
 ICE BENCHMARK ADMINISTRATION LIMITED (OR ANY  PREDECESSOR  OR  SUCCESSOR
 THEREOF),  OR  ANY  TENOR THEREOF, AS APPLICABLE, THAT IS USED IN MAKING
 ANY CALCULATION OR DETERMINATION THEREUNDER.
   2. "LIBOR DISCONTINUANCE EVENT" SHALL MEAN THE EARLIEST  TO  OCCUR  OF
 ANY OF THE FOLLOWING:
   A. A PUBLIC STATEMENT OR PUBLICATION OF INFORMATION BY OR ON BEHALF OF
 THE ADMINISTRATOR OF LIBOR ANNOUNCING THAT SUCH ADMINISTRATOR HAS CEASED
 OR  WILL  CEASE  TO PROVIDE LIBOR, PERMANENTLY OR INDEFINITELY, PROVIDED
 THAT, AT THE TIME OF THE STATEMENT OR PUBLICATION, THERE IS NO SUCCESSOR
 ADMINISTRATOR THAT WILL CONTINUE TO PROVIDE LIBOR;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                       [ ] is old law to be omitted.
                                                            LBD03775-04-1

 A. 164--A                           2
 
   B. A PUBLIC STATEMENT OR PUBLICATION OF INFORMATION BY THE  REGULATORY
 SUPERVISOR  FOR  THE  ADMINISTRATOR  OF LIBOR, THE UNITED STATES FEDERAL
 RESERVE SYSTEM, AN INSOLVENCY OFFICIAL WITH JURISDICTION OVER THE ADMIN-
 ISTRATOR FOR LIBOR, A RESOLUTION AUTHORITY WITH  JURISDICTION  OVER  THE
 ADMINISTRATOR  FOR LIBOR OR A COURT OR AN ENTITY WITH SIMILAR INSOLVENCY
 OR RESOLUTION AUTHORITY OVER THE ADMINISTRATOR FOR LIBOR,  WHICH  STATES
 THAT  THE  ADMINISTRATOR  OF  LIBOR  HAS CEASED OR WILL CEASE TO PROVIDE
 LIBOR PERMANENTLY OR INDEFINITELY, PROVIDED THAT, AT  THE  TIME  OF  THE
 STATEMENT  OR PUBLICATION, THERE IS NO SUCCESSOR ADMINISTRATOR THAT WILL
 CONTINUE TO PROVIDE LIBOR; OR 
   C. A PUBLIC STATEMENT OR PUBLICATION OF INFORMATION BY THE  REGULATORY
 SUPERVISOR  FOR  THE  ADMINISTRATOR OF LIBOR ANNOUNCING THAT LIBOR IS NO
 LONGER REPRESENTATIVE.  FOR PURPOSES OF THIS SUBDIVISION TWO,  A  PUBLIC
 STATEMENT OR PUBLICATION OF INFORMATION THAT AFFECTS  ONE OR MORE TENORS
 OF  LIBOR SHALL NOT CONSTITUTE A LIBOR DISCONTINUANCE EVENT WITH RESPECT
 TO  ANY CONTRACT, SECURITY OR INSTRUMENT THAT (I) PROVIDES FOR ONLY  ONE
 TENOR  OF  LIBOR,  IF  SUCH  CONTRACT,  SECURITY  OR INSTRUMENT REQUIRES
 INTERPOLATION AND SUCH TENOR CAN BE INTERPOLATED FROM LIBOR TENORS  THAT
 ARE  NOT  SO  AFFECTED, OR (II) PERMITS A PARTY TO CHOOSE FROM MORE THAN
 ONE TENOR OF LIBOR AND ANY OF SUCH TENORS (A) IS NOT SO AFFECTED OR  (B)
 IF  SUCH CONTRACT, SECURITY OR INSTRUMENT REQUIRES INTERPOLATION, CAN BE
 INTERPOLATED FROM LIBOR TENORS THAT ARE NOT SO AFFECTED.
   3. "LIBOR REPLACEMENT DATE" SHALL MEAN:
   A. IN THE CASE OF A LIBOR DISCONTINUANCE EVENT DESCRIBED IN  PARAGRAPH
 A  OR B OF SUBDIVISION TWO OF THIS SECTION, THE LATER OF (I) THE DATE OF
 THE PUBLIC STATEMENT OR PUBLICATION OF INFORMATION  REFERENCED  THEREIN;
 AND  (II)  THE  DATE  ON WHICH THE ADMINISTRATOR OF LIBOR PERMANENTLY OR
 INDEFINITELY CEASES TO PROVIDE LIBOR; AND
   B. IN THE CASE OF A LIBOR DISCONTINUANCE EVENT DESCRIBED IN  PARAGRAPH
 C  OF  SUBDIVISION TWO OF THIS SECTION, THE DATE OF THE PUBLIC STATEMENT
 OR PUBLICATION OF INFORMATION REFERENCED THEREIN.  FOR PURPOSES OF  THIS
 SUBDIVISION THREE, A DATE THAT AFFECTS ONE OR MORE TENORS OF LIBOR SHALL
 NOT  CONSTITUTE  A  LIBOR REPLACEMENT DATE WITH RESPECT TO ANY CONTRACT,
 SECURITY OR INSTRUMENT THAT (I) PROVIDES FOR ONLY ONE TENOR OF LIBOR, IF
 SUCH CONTRACT, SECURITY OR INSTRUMENT REQUIRES  INTERPOLATION  AND  SUCH
 TENOR CAN BE INTERPOLATED FROM LIBOR TENORS THAT ARE NOT SO AFFECTED, OR
 (II) PERMITS A PARTY TO CHOOSE FROM MORE THAN ONE TENOR OF LIBOR AND ANY
 OF  SUCH TENORS (A) IS NOT SO AFFECTED OR (B) IF SUCH CONTRACT, SECURITY
 OR INSTRUMENT REQUIRES INTERPOLATION, CAN  BE  INTERPOLATED  FROM  LIBOR
 TENORS THAT ARE NOT SO AFFECTED.
   4.  "FALLBACK  PROVISIONS" SHALL MEAN TERMS IN A CONTRACT, SECURITY OR
 INSTRUMENT THAT SET FORTH A METHODOLOGY OR PROCEDURE FOR  DETERMINING  A
 BENCHMARK REPLACEMENT, INCLUDING ANY TERMS RELATING TO THE DATE ON WHICH
 THE BENCHMARK REPLACEMENT BECOMES EFFECTIVE, WITHOUT REGARD TO WHETHER A
 BENCHMARK  REPLACEMENT CAN BE DETERMINED IN ACCORDANCE WITH SUCH METHOD-
 OLOGY OR PROCEDURE.
   5. "BENCHMARK" SHALL MEAN AN INDEX OF INTEREST RATES OR DIVIDEND RATES
 THAT IS USED, IN WHOLE OR IN PART, AS THE BASIS OF OR AS A REFERENCE FOR
 CALCULATING OR DETERMINING ANY VALUATION, PAYMENT OR  OTHER  MEASUREMENT
 UNDER OR IN RESPECT OF A CONTRACT, SECURITY OR INSTRUMENT.
   6. "BENCHMARK REPLACEMENT" SHALL MEAN A BENCHMARK, OR AN INTEREST RATE
 OR DIVIDEND RATE (WHICH MAY OR MAY NOT BE BASED IN WHOLE OR IN PART ON A
 PRIOR  SETTING OF LIBOR), TO REPLACE LIBOR OR ANY INTEREST RATE OR DIVI-
 DEND RATE BASED ON LIBOR, WHETHER ON A TEMPORARY, PERMANENT  OR  INDEFI-
 NITE BASIS, UNDER OR IN RESPECT OF A CONTRACT, SECURITY OR INSTRUMENT.

 A. 164--A                           3
 
   7. "RECOMMENDED BENCHMARK REPLACEMENT" SHALL MEAN, WITH RESPECT TO ANY
 PARTICULAR  TYPE  OF  CONTRACT,  SECURITY  OR  INSTRUMENT,  A  BENCHMARK
 REPLACEMENT BASED ON SOFR, WHICH SHALL INCLUDE  ANY  RECOMMENDED  SPREAD
 ADJUSTMENT  AND ANY BENCHMARK REPLACEMENT CONFORMING CHANGES, THAT SHALL
 HAVE  BEEN  SELECTED OR RECOMMENDED BY A RELEVANT RECOMMENDING BODY WITH
 RESPECT TO SUCH TYPE OF CONTRACT, SECURITY OR INSTRUMENT.
   8. "RECOMMENDED SPREAD ADJUSTMENT" SHALL MEAN A SPREAD ADJUSTMENT,  OR
 METHOD FOR CALCULATING OR DETERMINING SUCH SPREAD ADJUSTMENT, (WHICH MAY
 BE  A  POSITIVE OR NEGATIVE VALUE OR ZERO) THAT SHALL HAVE BEEN SELECTED
 OR RECOMMENDED BY A RELEVANT RECOMMENDING BODY FOR A RECOMMENDED  BENCH-
 MARK  REPLACEMENT FOR A PARTICULAR TYPE OF CONTRACT, SECURITY OR INSTRU-
 MENT AND FOR A PARTICULAR TERM TO ACCOUNT FOR THE EFFECTS OF THE TRANSI-
 TION OR CHANGE FROM LIBOR TO A RECOMMENDED BENCHMARK REPLACEMENT.
   9. "BENCHMARK REPLACEMENT CONFORMING CHANGES" SHALL MEAN, WITH RESPECT
 TO ANY TYPE OF CONTRACT, SECURITY OR INSTRUMENT, ANY TECHNICAL, ADMINIS-
 TRATIVE OR OPERATIONAL CHANGES, ALTERATIONS OR  MODIFICATIONS  THAT  ARE
 ASSOCIATED  WITH  AND  REASONABLY NECESSARY TO THE USE, ADOPTION, CALCU-
 LATION OR IMPLEMENTATION OF  A  RECOMMENDED  BENCHMARK  REPLACEMENT  AND
 THAT:
   A.  HAVE BEEN SELECTED OR RECOMMENDED BY A RELEVANT RECOMMENDING BODY;
 AND
   B. IF, IN THE REASONABLE  JUDGMENT  OF  THE  CALCULATING  PERSON,  THE
 BENCHMARK  REPLACEMENT CONFORMING CHANGES SELECTED OR RECOMMENDED PURSU-
 ANT TO PARAGRAPH A OF THIS SUBDIVISION DO NOT APPLY  TO  SUCH  CONTRACT,
 SECURITY  OR INSTRUMENT OR ARE INSUFFICIENT TO PERMIT ADMINISTRATION AND
 CALCULATION OF THE RECOMMENDED  BENCHMARK  REPLACEMENT,  THEN  BENCHMARK
 REPLACEMENT  CONFORMING CHANGES SHALL INCLUDE SUCH OTHER CHANGES, ALTER-
 ATIONS OR MODIFICATIONS THAT, IN THE REASONABLE JUDGMENT OF  THE  CALCU-
 LATING PERSON:
   (I)  ARE  NECESSARY  TO  PERMIT  ADMINISTRATION AND CALCULATION OF THE
 RECOMMENDED BENCHMARK REPLACEMENT UNDER OR IN RESPECT OF SUCH  CONTRACT,
 SECURITY  OR  INSTRUMENT IN A MANNER CONSISTENT WITH MARKET PRACTICE FOR
 SUBSTANTIALLY SIMILAR CONTRACTS, SECURITIES OR INSTRUMENTS AND,  TO  THE
 EXTENT  PRACTICABLE,  THE  MANNER  IN  WHICH  SUCH CONTRACT, SECURITY OR
 INSTRUMENT WAS ADMINISTERED IMMEDIATELY PRIOR TO THE  LIBOR  REPLACEMENT
 DATE; AND
   (II)  WOULD  NOT RESULT IN A DISPOSITION OF SUCH CONTRACT, SECURITY OR
 INSTRUMENT FOR U.S. FEDERAL INCOME TAX PURPOSES.
   10. "DETERMINING PERSON" SHALL MEAN, WITH  RESPECT  TO  ANY  CONTRACT,
 SECURITY OR INSTRUMENT, IN THE FOLLOWING ORDER OF PRIORITY:
   A. ANY PERSON SPECIFIED AS A "DETERMINING PERSON"; OR
   B. ANY PERSON WITH THE AUTHORITY, RIGHT OR OBLIGATION TO:
   (I)  DETERMINE  THE BENCHMARK REPLACEMENT THAT WILL TAKE EFFECT ON THE
 LIBOR REPLACEMENT DATE,
   (II) CALCULATE OR DETERMINE A VALUATION, PAYMENT OR OTHER  MEASUREMENT
 BASED ON A BENCHMARK, OR
   (III) NOTIFY OTHER PERSONS OF THE OCCURRENCE OF A LIBOR DISCONTINUANCE
 EVENT, A LIBOR REPLACEMENT DATE OR A BENCHMARK REPLACEMENT.
   11. "RELEVANT RECOMMENDING BODY" SHALL MEAN THE FEDERAL RESERVE BOARD,
 THE FEDERAL RESERVE BANK OF NEW YORK, OR THE ALTERNATIVE REFERENCE RATES
 COMMITTEE, OR ANY SUCCESSOR TO ANY OF THEM.
   12.  "SOFR" SHALL MEAN, WITH RESPECT TO ANY DAY, THE SECURED OVERNIGHT
 FINANCING RATE PUBLISHED FOR SUCH DAY BY THE FEDERAL RESERVE BANK OF NEW
 YORK, AS THE ADMINISTRATOR OF THE BENCHMARK (OR A SUCCESSOR  ADMINISTRA-
 TOR), ON THE FEDERAL RESERVE BANK OF NEW YORK'S WEBSITE.

 A. 164--A                           4
 
   13.  "CALCULATING  PERSON"  SHALL  MEAN, WITH RESPECT TO ANY CONTRACT,
 SECURITY OR INSTRUMENT, ANY PERSON (WHICH MAY BE THE DETERMINING PERSON)
 RESPONSIBLE FOR CALCULATING OR DETERMINING  ANY  VALUATION,  PAYMENT  OR
 OTHER MEASUREMENT BASED ON A BENCHMARK.
   14. "CONTRACT, SECURITY, OR INSTRUMENT" SHALL INCLUDE, WITHOUT LIMITA-
 TION,  ANY CONTRACT, AGREEMENT, MORTGAGE, DEED OF TRUST, LEASE, SECURITY
 (WHETHER REPRESENTING DEBT OR EQUITY, AND INCLUDING ANY  INTEREST  IN  A
 CORPORATION,  A PARTNERSHIP OR A LIMITED LIABILITY COMPANY), INSTRUMENT,
 OR OTHER OBLIGATION.
   § 18-401. EFFECT OF LIBOR DISCONTINUANCE  ON  AGREEMENTS.  1.  ON  THE
 LIBOR  REPLACEMENT DATE, THE RECOMMENDED BENCHMARK REPLACEMENT SHALL, BY
 OPERATION OF LAW, BE THE BENCHMARK REPLACEMENT FOR ANY CONTRACT, SECURI-
 TY OR INSTRUMENT THAT USES LIBOR AS A BENCHMARK AND:
   A. CONTAINS NO FALLBACK PROVISIONS; OR
   B. CONTAINS FALLBACK PROVISIONS THAT RESULT IN  A  BENCHMARK  REPLACE-
 MENT,  OTHER  THAN A RECOMMENDED BENCHMARK REPLACEMENT, THAT IS BASED IN
 ANY WAY ON ANY LIBOR VALUE.
   2. FOLLOWING THE OCCURRENCE OF A LIBOR DISCONTINUANCE EVENT, ANY FALL-
 BACK PROVISIONS IN A CONTRACT, SECURITY, OR INSTRUMENT THAT PROVIDE  FOR
 A  BENCHMARK  REPLACEMENT BASED ON OR OTHERWISE INVOLVING A POLL, SURVEY
 OR INQUIRIES FOR QUOTES  OR  INFORMATION  CONCERNING  INTERBANK  LENDING
 RATES  OR  ANY  INTEREST  RATE  OR DIVIDEND RATE BASED ON LIBOR SHALL BE
 DISREGARDED AS IF NOT INCLUDED IN SUCH CONTRACT, SECURITY OR  INSTRUMENT
 AND SHALL BE DEEMED NULL AND VOID AND WITHOUT ANY FORCE OR EFFECT.
   3.  THIS SUBDIVISION SHALL APPLY TO ANY CONTRACT, SECURITY, OR INSTRU-
 MENT THAT USES LIBOR AS A BENCHMARK  AND  CONTAINS  FALLBACK  PROVISIONS
 THAT PERMIT OR REQUIRE THE SELECTION OF A BENCHMARK REPLACEMENT THAT IS:
   A. BASED IN ANY WAY ON ANY LIBOR VALUE; OR
   B.  THE  SUBSTANTIVE  EQUIVALENT OF PARAGRAPH A, B OR C OF SUBDIVISION
 ONE OF SECTION 18-402 OF THIS ARTICLE.
   A DETERMINING PERSON SHALL HAVE THE AUTHORITY UNDER THIS ARTICLE,  BUT
 SHALL  NOT  BE REQUIRED, TO SELECT ON OR AFTER THE OCCURRENCE OF A LIBOR
 DISCONTINUANCE EVENT THE RECOMMENDED BENCHMARK REPLACEMENT AS THE BENCH-
 MARK REPLACEMENT. SUCH SELECTION OF THE RECOMMENDED  BENCHMARK  REPLACE-
 MENT SHALL BE:
   (I) IRREVOCABLE;
   (II)  MADE BY THE EARLIER OF EITHER THE LIBOR REPLACEMENT DATE, OR THE
 LATEST DATE FOR SELECTING A  BENCHMARK  REPLACEMENT  ACCORDING  TO  SUCH
 CONTRACT, SECURITY, OR INSTRUMENT; AND
   (III)  USED  IN  ANY  DETERMINATIONS  OF  THE  BENCHMARK UNDER OR WITH
 RESPECT TO SUCH CONTRACT, SECURITY OR INSTRUMENT OCCURRING ON AND  AFTER
 THE LIBOR REPLACEMENT DATE.
   4.  IF  A  RECOMMENDED  BENCHMARK  REPLACEMENT  BECOMES  THE BENCHMARK
 REPLACEMENT FOR ANY CONTRACT, SECURITY, OR INSTRUMENT PURSUANT TO SUBDI-
 VISION ONE OR SUBDIVISION THREE OF  THIS  SECTION,  THEN  ALL  BENCHMARK
 REPLACEMENT  CONFORMING  CHANGES THAT ARE APPLICABLE (IN ACCORDANCE WITH
 THE DEFINITION OF BENCHMARK  REPLACEMENT  CONFORMING  CHANGES)  TO  SUCH
 RECOMMENDED  BENCHMARK REPLACEMENT SHALL BECOME AN INTEGRAL PART OF SUCH
 CONTRACT, SECURITY, OR INSTRUMENT BY OPERATION OF LAW.
   5. THE PROVISIONS OF THIS ARTICLE SHALL NOT ALTER OR IMPAIR:
   A. ANY WRITTEN AGREEMENT BY ALL REQUISITE PARTIES THAT, RETROSPECTIVE-
 LY OR PROSPECTIVELY, A CONTRACT, SECURITY, OR INSTRUMENT  SHALL  NOT  BE
 SUBJECT  TO  THIS  ARTICLE WITHOUT NECESSARILY REFERRING SPECIFICALLY TO
 THIS ARTICLE. FOR PURPOSES  OF  THIS  SUBDIVISION,  "REQUISITE  PARTIES"
 MEANS  ALL  PARTIES  REQUIRED  TO  AMEND  THE  TERMS AND PROVISIONS OF A

 A. 164--A                           5
 
 CONTRACT, SECURITY, OR INSTRUMENT THAT WOULD  OTHERWISE  BE  ALTERED  OR
 AFFECTED BY THIS ARTICLE;
   B.  ANY  CONTRACT,  SECURITY  OR  INSTRUMENT  THAT  CONTAINS  FALLBACK
 PROVISIONS THAT WOULD RESULT IN A  BENCHMARK  REPLACEMENT  THAT  IS  NOT
 BASED  ON  LIBOR,  INCLUDING,  BUT NOT LIMITED TO, THE PRIME RATE OR THE
 FEDERAL FUNDS RATE, EXCEPT THAT SUCH  CONTRACT, SECURITY  OR  INSTRUMENT
 SHALL BE SUBJECT TO SUBDIVISION TWO OF THIS SECTION;
   C.  ANY CONTRACT, SECURITY, OR INSTRUMENT SUBJECT TO SUBDIVISION THREE
 OF THIS SECTION AS TO WHICH A DETERMINING PERSON DOES NOT ELECT TO USE A
 RECOMMENDED BENCHMARK REPLACEMENT PURSUANT TO SUBDIVISION THREE OF  THIS
 SECTION  OR AS TO WHICH A DETERMINING PERSON ELECTS TO USE A RECOMMENDED
 BENCHMARK REPLACEMENT PRIOR TO THE OCCURRENCE OF A LIBOR  DISCONTINUANCE
 EVENT,  EXCEPT  THAT  SUCH  CONTRACT,  SECURITY,  OR INSTRUMENT SHALL BE
 SUBJECT TO SUBDIVISION TWO OF THIS SECTION; OR
   D. THE APPLICATION TO A RECOMMENDED BENCHMARK REPLACEMENT OF ANY  CAP,
 FLOOR,  MODIFIER,  OR  SPREAD ADJUSTMENT TO WHICH LIBOR HAD BEEN SUBJECT
 PURSUANT TO THE TERMS OF A CONTRACT, SECURITY, OR INSTRUMENT.
   6. NOTWITHSTANDING THE UNIFORM COMMERCIAL CODE OR  ANY  OTHER  LAW  OF
 THIS  STATE,  THIS  TITLE  SHALL  APPLY TO ALL CONTRACTS, SECURITIES AND
 INSTRUMENTS, INCLUDING CONTRACTS,  WITH  RESPECT  TO  COMMERCIAL  TRANS-
 ACTIONS,  AND  SHALL  NOT  BE DEEMED TO BE DISPLACED BY ANY OTHER LAW OF
 THIS STATE.
   § 18-402. CONTINUITY OF CONTRACT AND SAFE HARBOR. 1. THE SELECTION  OR
 USE  OF  A  RECOMMENDED BENCHMARK REPLACEMENT AS A BENCHMARK REPLACEMENT
 UNDER OR IN RESPECT OF A CONTRACT, SECURITY OR INSTRUMENT  BY  OPERATION
 OF SECTION 18-401 OF THIS SECTION SHALL CONSTITUTE:
   A.  A  COMMERCIALLY  REASONABLE  REPLACEMENT  FOR  AND  A COMMERCIALLY
 SUBSTANTIAL EQUIVALENT TO LIBOR;
   B. A REASONABLE, COMPARABLE OR ANALOGOUS TERM FOR LIBOR  UNDER  OR  IN
 RESPECT OF SUCH CONTRACT, SECURITY OR INSTRUMENT;
   C. A REPLACEMENT THAT IS BASED ON A METHODOLOGY OR INFORMATION THAT IS
 SIMILAR OR COMPARABLE TO LIBOR; AND
   D.  SUBSTANTIAL  PERFORMANCE  BY ANY PERSON OF ANY RIGHT OR OBLIGATION
 RELATING TO OR BASED ON LIBOR UNDER OR IN RESPECT OF A CONTRACT, SECURI-
 TY OR INSTRUMENT.
   2. NONE OF: A. A LIBOR DISCONTINUANCE EVENT  OR  A  LIBOR  REPLACEMENT
 DATE,  B. THE SELECTION OR USE OF A RECOMMENDED BENCHMARK REPLACEMENT AS
 A BENCHMARK REPLACEMENT; OR C.   THE  DETERMINATION,  IMPLEMENTATION  OR
 PERFORMANCE  OF  BENCHMARK REPLACEMENT CONFORMING CHANGES, IN EACH CASE,
 BY OPERATION OF SECTION 18-401 OF THIS ARTICLE, SHALL:
   (I) BE DEEMED TO IMPAIR OR AFFECT THE RIGHT OF ANY PERSON TO RECEIVE A
 PAYMENT, OR AFFECT THE AMOUNT OR  TIMING  OF  SUCH  PAYMENT,  UNDER  ANY
 CONTRACT, SECURITY, OR INSTRUMENT; OR
   (II)  HAVE THE EFFECT OF (A) DISCHARGING OR EXCUSING PERFORMANCE UNDER
 ANY CONTRACT, SECURITY OR INSTRUMENT FOR ANY REASON, CLAIM  OR  DEFENSE,
 INCLUDING,  BUT  NOT LIMITED TO, ANY FORCE MAJEURE OR OTHER PROVISION IN
 ANY CONTRACT, SECURITY OR INSTRUMENT; (B) GIVING ANY PERSON THE RIGHT TO
 UNILATERALLY TERMINATE OR SUSPEND PERFORMANCE UNDER ANY CONTRACT,  SECU-
 RITY OR INSTRUMENT; (C) CONSTITUTING A BREACH OF A CONTRACT, SECURITY OR
 INSTRUMENT;  OR  (D)  VOIDING  OR  NULLIFYING  ANY CONTRACT, SECURITY OR
 INSTRUMENT.
   3. NO PERSON SHALL HAVE ANY LIABILITY FOR DAMAGES TO ANY PERSON OR  BE
 SUBJECT  TO  ANY CLAIM OR REQUEST FOR EQUITABLE RELIEF ARISING OUT OF OR
 RELATED TO THE SELECTION OR USE OF A RECOMMENDED  BENCHMARK  REPLACEMENT
 OR   THE  DETERMINATION,  IMPLEMENTATION  OR  PERFORMANCE  OF  BENCHMARK
 REPLACEMENT CONFORMING CHANGES, IN EACH CASE, BY  OPERATION  OF  SECTION

 A. 164--A                           6
 
 18-401  OF  THIS  ARTICLE,  AND SUCH SELECTION OR USE OF THE RECOMMENDED
 BENCHMARK REPLACEMENT OR SUCH DETERMINATION IMPLEMENTATION  OR  PERFORM-
 ANCE  OF BENCHMARK REPLACEMENT CONFORMING CHANGES SHALL NOT GIVE RISE TO
 ANY CLAIM OR CAUSE OF ACTION BY ANY PERSON IN LAW OR IN EQUITY.
   4.  THE SELECTION OR USE OF A RECOMMENDED BENCHMARK REPLACEMENT OR THE
 DETERMINATION, IMPLEMENTATION, OR PERFORMANCE OF  BENCHMARK  REPLACEMENT
 CONFORMING  CHANGES,  BY  OPERATION  OF  SECTION 18-401 OF THIS ARTICLE,
 SHALL BE DEEMED TO:
   A. NOT BE AN AMENDMENT OR MODIFICATION OF ANY  CONTRACT,  SECURITY  OR
 INSTRUMENT; AND
   B.  NOT  PREJUDICE, IMPAIR OR AFFECT ANY PERSON'S RIGHTS, INTERESTS OR
 OBLIGATIONS UNDER OR IN RESPECT OF ANY CONTRACT, SECURITY OR INSTRUMENT.
   5. EXCEPT AS PROVIDED IN EITHER SUBDIVISION ONE OR  SUBDIVISION  THREE
 OF  SECTION 18-401 OF THIS ARTICLE, THE PROVISIONS OF THIS ARTICLE SHALL
 NOT BE INTERPRETED  AS  CREATING  ANY  NEGATIVE  INFERENCE  OR  NEGATIVE
 PRESUMPTION REGARDING THE VALIDITY OR ENFORCEABILITY OF:
   A.  ANY  BENCHMARK  REPLACEMENT  THAT IS NOT A RECOMMENDED REPLACEMENT
 BENCHMARK;
   B. ANY SPREAD ADJUSTMENT, OR METHOD FOR CALCULATING OR  DETERMINING  A
 SPREAD ADJUSTMENT, THAT IS NOT A RECOMMENDED SPREAD ADJUSTMENT; OR
   C.  ANY  CHANGES,  ALTERATIONS  OR MODIFICATIONS TO OR IN RESPECT OF A
 CONTRACT, SECURITY OR INSTRUMENT  THAT  ARE  NOT  BENCHMARK  REPLACEMENT
 CONFORMING CHANGES.
   § 18-403. SEVERABILITY.  IF  ANY PROVISION OF THIS ARTICLE OR APPLICA-
 TION THEREOF TO ANY PERSON OR CIRCUMSTANCE IS HELD INVALID, THE INVALID-
 ITY SHALL NOT AFFECT OTHER PROVISIONS OR APPLICATIONS  OF  THIS  ARTICLE
 THAT  CAN  BE GIVEN EFFECT WITHOUT THE INVALID PROVISION OR APPLICATION,
 AND TO THIS END THE PROVISIONS OF THIS ARTICLE SHALL BE SEVERABLE.
   § 2. This act shall take effect immediately.

Co-Sponsors

A164B (ACTIVE) - Details

See Senate Version of this Bill:: S297
Law Section:: General Obligations Law
Laws Affected:: Add Art 18-C §§18-400 - 18-403, Gen Ob L
Versions Introduced in 2019-2020 Legislative Session:: A11098, S9070

A164B (ACTIVE) - Summary

A164B (ACTIVE) - Bill Text download pdf

 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  164--B
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                                (PREFILED)
 
                              January 6, 2021
                                ___________
 
 Introduced  by  M.  of  A.  ZEBROWSKI  --  read once and referred to the
   Committee on Judiciary -- committee discharged, bill amended,  ordered
   reprinted  as  amended  and recommitted to said committee -- committee
   discharged, bill amended, ordered reprinted as amended and recommitted
   to said committee
 
 AN ACT to amend the general obligations law, in relation to the  discon-
   tinuance of the London interbank offered rate
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The general obligations law is  amended  by  adding  a  new
 article 18-C to read as follows:
                               ARTICLE 18-C
                           LIBOR DISCONTINUANCE
 SECTION 18-400. DEFINITIONS.
         18-401. EFFECT OF LIBOR DISCONTINUANCE ON AGREEMENTS.
         18-402. CONTINUITY OF CONTRACT AND SAFE HARBOR.
         18-403. SEVERABILITY.
   §  18-400.  DEFINITIONS.  AS  USED IN THIS ARTICLE THE FOLLOWING TERMS
 SHALL HAVE THE FOLLOWING MEANINGS:
   1. "LIBOR" SHALL MEAN, FOR PURPOSES OF THE APPLICATION OF THIS ARTICLE
 TO ANY PARTICULAR CONTRACT, SECURITY OR INSTRUMENT,  U.S.  DOLLAR  LIBOR
 (FORMERLY KNOWN AS THE LONDON INTERBANK OFFERED RATE) AS ADMINISTERED BY
 ICE  BENCHMARK  ADMINISTRATION  LIMITED (OR ANY PREDECESSOR OR SUCCESSOR
 THEREOF), OR ANY TENOR THEREOF, AS APPLICABLE, THAT IS  USED  IN  MAKING
 ANY CALCULATION OR DETERMINATION THEREUNDER.
   2.  "LIBOR  DISCONTINUANCE  EVENT" SHALL MEAN THE EARLIEST TO OCCUR OF
 ANY OF THE FOLLOWING:
   A. A PUBLIC STATEMENT OR PUBLICATION OF INFORMATION BY OR ON BEHALF OF
 THE ADMINISTRATOR OF LIBOR ANNOUNCING THAT SUCH ADMINISTRATOR HAS CEASED
 OR WILL CEASE TO PROVIDE LIBOR, PERMANENTLY  OR  INDEFINITELY,  PROVIDED

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                       [ ] is old law to be omitted.
                                                            LBD03775-05-1

 A. 164--B                           2
 
 THAT, AT THE TIME OF THE STATEMENT OR PUBLICATION, THERE IS NO SUCCESSOR
 ADMINISTRATOR THAT WILL CONTINUE TO PROVIDE LIBOR;
   B.  A PUBLIC STATEMENT OR PUBLICATION OF INFORMATION BY THE REGULATORY
 SUPERVISOR FOR THE ADMINISTRATOR OF LIBOR,  THE  UNITED  STATES  FEDERAL
 RESERVE SYSTEM, AN INSOLVENCY OFFICIAL WITH JURISDICTION OVER THE ADMIN-
 ISTRATOR  FOR  LIBOR,  A RESOLUTION AUTHORITY WITH JURISDICTION OVER THE
 ADMINISTRATOR FOR LIBOR OR A COURT OR AN ENTITY WITH SIMILAR  INSOLVENCY
 OR  RESOLUTION  AUTHORITY OVER THE ADMINISTRATOR FOR LIBOR, WHICH STATES
 THAT THE ADMINISTRATOR OF LIBOR HAS CEASED  OR  WILL  CEASE  TO  PROVIDE
 LIBOR  PERMANENTLY  OR  INDEFINITELY,  PROVIDED THAT, AT THE TIME OF THE
 STATEMENT OR PUBLICATION, THERE IS NO SUCCESSOR ADMINISTRATOR THAT  WILL
 CONTINUE TO PROVIDE LIBOR; OR 
   C.  A PUBLIC STATEMENT OR PUBLICATION OF INFORMATION BY THE REGULATORY
 SUPERVISOR FOR THE ADMINISTRATOR OF LIBOR ANNOUNCING THAT  LIBOR  IS  NO
 LONGER  REPRESENTATIVE.   FOR PURPOSES OF THIS SUBDIVISION TWO, A PUBLIC
 STATEMENT OR PUBLICATION OF INFORMATION THAT AFFECTS  ONE OR MORE TENORS
 OF LIBOR SHALL NOT CONSTITUTE A LIBOR DISCONTINUANCE EVENT WITH  RESPECT
 TO   ANY CONTRACT, SECURITY OR INSTRUMENT THAT (I) PROVIDES FOR ONLY ONE
 TENOR OF LIBOR,  IF  SUCH  CONTRACT,  SECURITY  OR  INSTRUMENT  REQUIRES
 INTERPOLATION  AND SUCH TENOR CAN BE INTERPOLATED FROM LIBOR TENORS THAT
 ARE NOT SO AFFECTED, OR (II) PERMITS A PARTY TO CHOOSE  FROM  MORE  THAN
 ONE  TENOR OF LIBOR AND ANY OF SUCH TENORS (A) IS NOT SO AFFECTED OR (B)
 IF SUCH CONTRACT, SECURITY OR INSTRUMENT REQUIRES INTERPOLATION, CAN  BE
 INTERPOLATED FROM LIBOR TENORS THAT ARE NOT SO AFFECTED.
   3. "LIBOR REPLACEMENT DATE" SHALL MEAN:
   A.  IN THE CASE OF A LIBOR DISCONTINUANCE EVENT DESCRIBED IN PARAGRAPH
 A OR B OF SUBDIVISION TWO OF THIS SECTION, THE LATER OF (I) THE DATE  OF
 THE  PUBLIC  STATEMENT OR PUBLICATION OF INFORMATION REFERENCED THEREIN;
 AND (II) THE DATE ON WHICH THE ADMINISTRATOR  OF  LIBOR  PERMANENTLY  OR
 INDEFINITELY CEASES TO PROVIDE LIBOR; AND
   B.  IN THE CASE OF A LIBOR DISCONTINUANCE EVENT DESCRIBED IN PARAGRAPH
 C OF SUBDIVISION TWO OF THIS SECTION, THE DATE OF THE  PUBLIC  STATEMENT
 OR  PUBLICATION OF INFORMATION REFERENCED THEREIN.  FOR PURPOSES OF THIS
 SUBDIVISION, A DATE THAT AFFECTS ONE OR MORE TENORS OF LIBOR  SHALL  NOT
 CONSTITUTE  A LIBOR REPLACEMENT DATE WITH RESPECT TO ANY CONTRACT, SECU-
 RITY OR INSTRUMENT THAT (I) PROVIDES FOR ONLY ONE  TENOR  OF  LIBOR,  IF
 SUCH  CONTRACT,  SECURITY  OR INSTRUMENT REQUIRES INTERPOLATION AND SUCH
 TENOR CAN BE INTERPOLATED FROM LIBOR TENORS THAT ARE NOT SO AFFECTED, OR
 (II) PERMITS A PARTY TO CHOOSE FROM MORE THAN ONE TENOR OF LIBOR AND ANY
 OF SUCH TENORS (A) IS NOT SO AFFECTED OR (B) IF SUCH CONTRACT,  SECURITY
 OR  INSTRUMENT  REQUIRES  INTERPOLATION,  CAN BE INTERPOLATED FROM LIBOR
 TENORS THAT ARE NOT SO AFFECTED.
   4. "FALLBACK PROVISIONS" SHALL MEAN TERMS IN A CONTRACT,  SECURITY  OR
 INSTRUMENT  THAT  SET FORTH A METHODOLOGY OR PROCEDURE FOR DETERMINING A
 BENCHMARK REPLACEMENT, INCLUDING ANY TERMS RELATING TO THE DATE ON WHICH
 THE BENCHMARK REPLACEMENT BECOMES EFFECTIVE, WITHOUT REGARD TO WHETHER A
 BENCHMARK REPLACEMENT CAN BE DETERMINED IN ACCORDANCE WITH SUCH  METHOD-
 OLOGY OR PROCEDURE.
   5. "BENCHMARK" SHALL MEAN AN INDEX OF INTEREST RATES OR DIVIDEND RATES
 THAT IS USED, IN WHOLE OR IN PART, AS THE BASIS OF OR AS A REFERENCE FOR
 CALCULATING  OR  DETERMINING ANY VALUATION, PAYMENT OR OTHER MEASUREMENT
 UNDER OR IN RESPECT OF A CONTRACT, SECURITY OR INSTRUMENT.
   6. "BENCHMARK REPLACEMENT" SHALL MEAN A BENCHMARK, OR AN INTEREST RATE
 OR DIVIDEND RATE (WHICH MAY OR MAY NOT BE BASED IN WHOLE OR IN PART ON A
 PRIOR SETTING OF LIBOR), TO REPLACE LIBOR OR ANY INTEREST RATE OR  DIVI-

 A. 164--B                           3
 
 DEND  RATE  BASED ON LIBOR, WHETHER ON A TEMPORARY, PERMANENT OR INDEFI-
 NITE BASIS, UNDER OR IN RESPECT OF A CONTRACT, SECURITY OR INSTRUMENT.
   7. "RECOMMENDED BENCHMARK REPLACEMENT" SHALL MEAN, WITH RESPECT TO ANY
 PARTICULAR  TYPE  OF  CONTRACT,  SECURITY  OR  INSTRUMENT,  A  BENCHMARK
 REPLACEMENT BASED ON SOFR, WHICH SHALL INCLUDE  ANY  RECOMMENDED  SPREAD
 ADJUSTMENT  AND ANY BENCHMARK REPLACEMENT CONFORMING CHANGES, THAT SHALL
 HAVE BEEN SELECTED OR RECOMMENDED BY A RELEVANT RECOMMENDING  BODY  WITH
 RESPECT TO SUCH TYPE OF CONTRACT, SECURITY OR INSTRUMENT.
   8.  "RECOMMENDED SPREAD ADJUSTMENT" SHALL MEAN A SPREAD ADJUSTMENT, OR
 METHOD FOR CALCULATING OR DETERMINING SUCH SPREAD ADJUSTMENT, (WHICH MAY
 BE A POSITIVE OR NEGATIVE VALUE OR ZERO) THAT SHALL HAVE  BEEN  SELECTED
 OR  RECOMMENDED BY A RELEVANT RECOMMENDING BODY FOR A RECOMMENDED BENCH-
 MARK REPLACEMENT FOR A PARTICULAR TYPE OF CONTRACT, SECURITY OR  INSTRU-
 MENT AND FOR A PARTICULAR TERM TO ACCOUNT FOR THE EFFECTS OF THE TRANSI-
 TION OR CHANGE FROM LIBOR TO A RECOMMENDED BENCHMARK REPLACEMENT.
   9. "BENCHMARK REPLACEMENT CONFORMING CHANGES" SHALL MEAN, WITH RESPECT
 TO ANY TYPE OF CONTRACT, SECURITY OR INSTRUMENT, ANY TECHNICAL, ADMINIS-
 TRATIVE  OR  OPERATIONAL  CHANGES, ALTERATIONS OR MODIFICATIONS THAT ARE
 ASSOCIATED WITH AND REASONABLY NECESSARY TO THE  USE,  ADOPTION,  CALCU-
 LATION  OR  IMPLEMENTATION  OF  A  RECOMMENDED BENCHMARK REPLACEMENT AND
 THAT:
   A. HAVE BEEN SELECTED OR RECOMMENDED BY A RELEVANT RECOMMENDING  BODY;
 AND
   B.  IF,  IN  THE  REASONABLE  JUDGMENT  OF THE CALCULATING PERSON, THE
 BENCHMARK REPLACEMENT CONFORMING CHANGES SELECTED OR RECOMMENDED  PURSU-
 ANT  TO  PARAGRAPH  A OF THIS SUBDIVISION DO NOT APPLY TO SUCH CONTRACT,
 SECURITY OR INSTRUMENT OR ARE INSUFFICIENT TO PERMIT ADMINISTRATION  AND
 CALCULATION  OF  THE  RECOMMENDED  BENCHMARK REPLACEMENT, THEN BENCHMARK
 REPLACEMENT CONFORMING CHANGES SHALL INCLUDE SUCH OTHER CHANGES,  ALTER-
 ATIONS  OR  MODIFICATIONS THAT, IN THE REASONABLE JUDGMENT OF THE CALCU-
 LATING PERSON:
   (I) ARE NECESSARY TO PERMIT  ADMINISTRATION  AND  CALCULATION  OF  THE
 RECOMMENDED  BENCHMARK REPLACEMENT UNDER OR IN RESPECT OF SUCH CONTRACT,
 SECURITY OR INSTRUMENT IN A MANNER CONSISTENT WITH MARKET  PRACTICE  FOR
 SUBSTANTIALLY  SIMILAR  CONTRACTS, SECURITIES OR INSTRUMENTS AND, TO THE
 EXTENT PRACTICABLE, THE MANNER  IN  WHICH  SUCH  CONTRACT,  SECURITY  OR
 INSTRUMENT  WAS  ADMINISTERED IMMEDIATELY PRIOR TO THE LIBOR REPLACEMENT
 DATE; AND
   (II) WOULD NOT RESULT IN A DISPOSITION OF SUCH CONTRACT,  SECURITY  OR
 INSTRUMENT FOR U.S. FEDERAL INCOME TAX PURPOSES.
   10.  "DETERMINING  PERSON"  SHALL  MEAN, WITH RESPECT TO ANY CONTRACT,
 SECURITY OR INSTRUMENT, IN THE FOLLOWING ORDER OF PRIORITY:
   A. ANY PERSON SPECIFIED AS A "DETERMINING PERSON"; OR
   B. ANY PERSON WITH THE AUTHORITY, RIGHT OR OBLIGATION TO:
   (I) DETERMINE THE BENCHMARK REPLACEMENT THAT WILL TAKE EFFECT  ON  THE
 LIBOR REPLACEMENT DATE,
   (II)  CALCULATE OR DETERMINE A VALUATION, PAYMENT OR OTHER MEASUREMENT
 BASED ON A BENCHMARK, OR
   (III) NOTIFY OTHER PERSONS OF THE OCCURRENCE OF A LIBOR DISCONTINUANCE
 EVENT, A LIBOR REPLACEMENT DATE OR A BENCHMARK REPLACEMENT.
   11. "RELEVANT RECOMMENDING BODY" SHALL MEAN THE FEDERAL RESERVE BOARD,
 THE FEDERAL RESERVE BANK OF NEW YORK, OR THE ALTERNATIVE REFERENCE RATES
 COMMITTEE, OR ANY SUCCESSOR TO ANY OF THEM.
   12. "SOFR" SHALL MEAN, WITH RESPECT TO ANY DAY, THE SECURED  OVERNIGHT
 FINANCING RATE PUBLISHED FOR SUCH DAY BY THE FEDERAL RESERVE BANK OF NEW

 A. 164--B                           4
 
 YORK,  AS THE ADMINISTRATOR OF THE BENCHMARK (OR A SUCCESSOR ADMINISTRA-
 TOR), ON THE FEDERAL RESERVE BANK OF NEW YORK'S WEBSITE.
   13.  "CALCULATING  PERSON"  SHALL  MEAN, WITH RESPECT TO ANY CONTRACT,
 SECURITY OR INSTRUMENT, ANY PERSON (WHICH MAY BE THE DETERMINING PERSON)
 RESPONSIBLE FOR CALCULATING OR DETERMINING  ANY  VALUATION,  PAYMENT  OR
 OTHER MEASUREMENT BASED ON A BENCHMARK.
   14. "CONTRACT, SECURITY, OR INSTRUMENT" SHALL INCLUDE, WITHOUT LIMITA-
 TION,  ANY CONTRACT, AGREEMENT, MORTGAGE, DEED OF TRUST, LEASE, SECURITY
 (WHETHER REPRESENTING DEBT OR EQUITY, AND INCLUDING ANY  INTEREST  IN  A
 CORPORATION,  A PARTNERSHIP OR A LIMITED LIABILITY COMPANY), INSTRUMENT,
 OR OTHER OBLIGATION.
   § 18-401. EFFECT OF LIBOR DISCONTINUANCE  ON  AGREEMENTS.  1.  ON  THE
 LIBOR  REPLACEMENT DATE, THE RECOMMENDED BENCHMARK REPLACEMENT SHALL, BY
 OPERATION OF LAW, BE THE BENCHMARK REPLACEMENT FOR ANY CONTRACT, SECURI-
 TY OR INSTRUMENT THAT USES LIBOR AS A BENCHMARK AND:
   A. CONTAINS NO FALLBACK PROVISIONS; OR
   B. CONTAINS FALLBACK PROVISIONS THAT RESULT IN  A  BENCHMARK  REPLACE-
 MENT,  OTHER  THAN A RECOMMENDED BENCHMARK REPLACEMENT, THAT IS BASED IN
 ANY WAY ON ANY LIBOR VALUE.
   2. FOLLOWING THE OCCURRENCE OF A LIBOR DISCONTINUANCE EVENT, ANY FALL-
 BACK PROVISIONS IN A CONTRACT, SECURITY, OR INSTRUMENT THAT PROVIDE  FOR
 A  BENCHMARK  REPLACEMENT BASED ON OR OTHERWISE INVOLVING A POLL, SURVEY
 OR INQUIRIES FOR QUOTES  OR  INFORMATION  CONCERNING  INTERBANK  LENDING
 RATES  OR  ANY  INTEREST  RATE  OR DIVIDEND RATE BASED ON LIBOR SHALL BE
 DISREGARDED AS IF NOT INCLUDED IN SUCH CONTRACT, SECURITY OR  INSTRUMENT
 AND SHALL BE DEEMED NULL AND VOID AND WITHOUT ANY FORCE OR EFFECT.
   3.  THIS SUBDIVISION SHALL APPLY TO ANY CONTRACT, SECURITY, OR INSTRU-
 MENT THAT USES LIBOR AS A BENCHMARK  AND  CONTAINS  FALLBACK  PROVISIONS
 THAT PERMIT OR REQUIRE THE SELECTION OF A BENCHMARK REPLACEMENT THAT IS:
   A. BASED IN ANY WAY ON ANY LIBOR VALUE; OR
   B.  THE  SUBSTANTIVE  EQUIVALENT OF PARAGRAPH A, B OR C OF SUBDIVISION
 ONE OF SECTION 18-402 OF THIS ARTICLE.
   A DETERMINING PERSON SHALL HAVE THE AUTHORITY UNDER THIS ARTICLE,  BUT
 SHALL  NOT  BE REQUIRED, TO SELECT ON OR AFTER THE OCCURRENCE OF A LIBOR
 DISCONTINUANCE EVENT THE RECOMMENDED BENCHMARK REPLACEMENT AS THE BENCH-
 MARK REPLACEMENT. SUCH SELECTION OF THE RECOMMENDED  BENCHMARK  REPLACE-
 MENT SHALL BE:
   (I) IRREVOCABLE;
   (II)  MADE BY THE EARLIER OF EITHER THE LIBOR REPLACEMENT DATE, OR THE
 LATEST DATE FOR SELECTING A  BENCHMARK  REPLACEMENT  ACCORDING  TO  SUCH
 CONTRACT, SECURITY, OR INSTRUMENT; AND
   (III)  USED  IN  ANY  DETERMINATIONS  OF  THE  BENCHMARK UNDER OR WITH
 RESPECT TO SUCH CONTRACT, SECURITY OR INSTRUMENT OCCURRING ON AND  AFTER
 THE LIBOR REPLACEMENT DATE.
   4.  IF  A  RECOMMENDED  BENCHMARK  REPLACEMENT  BECOMES  THE BENCHMARK
 REPLACEMENT FOR ANY CONTRACT, SECURITY, OR INSTRUMENT PURSUANT TO SUBDI-
 VISION ONE OR SUBDIVISION THREE OF  THIS  SECTION,  THEN  ALL  BENCHMARK
 REPLACEMENT  CONFORMING  CHANGES THAT ARE APPLICABLE (IN ACCORDANCE WITH
 THE DEFINITION OF BENCHMARK  REPLACEMENT  CONFORMING  CHANGES)  TO  SUCH
 RECOMMENDED  BENCHMARK REPLACEMENT SHALL BECOME AN INTEGRAL PART OF SUCH
 CONTRACT, SECURITY, OR INSTRUMENT BY OPERATION OF LAW.
   5. THE PROVISIONS OF THIS ARTICLE SHALL NOT ALTER OR IMPAIR:
   A. ANY WRITTEN AGREEMENT BY ALL REQUISITE PARTIES THAT, RETROSPECTIVE-
 LY OR PROSPECTIVELY, A CONTRACT, SECURITY, OR INSTRUMENT  SHALL  NOT  BE
 SUBJECT  TO  THIS  ARTICLE WITHOUT NECESSARILY REFERRING SPECIFICALLY TO
 THIS ARTICLE. FOR PURPOSES  OF  THIS  SUBDIVISION,  "REQUISITE  PARTIES"

 A. 164--B                           5
 
 MEANS  ALL  PARTIES  REQUIRED  TO  AMEND  THE  TERMS AND PROVISIONS OF A
 CONTRACT, SECURITY, OR INSTRUMENT THAT WOULD  OTHERWISE  BE  ALTERED  OR
 AFFECTED BY THIS ARTICLE;
   B.  ANY  CONTRACT,  SECURITY  OR  INSTRUMENT  THAT  CONTAINS  FALLBACK
 PROVISIONS THAT WOULD RESULT IN A  BENCHMARK  REPLACEMENT  THAT  IS  NOT
 BASED  ON  LIBOR,  INCLUDING,  BUT NOT LIMITED TO, THE PRIME RATE OR THE
 FEDERAL FUNDS RATE, EXCEPT THAT SUCH  CONTRACT, SECURITY  OR  INSTRUMENT
 SHALL BE SUBJECT TO SUBDIVISION TWO OF THIS SECTION;
   C.  ANY CONTRACT, SECURITY, OR INSTRUMENT SUBJECT TO SUBDIVISION THREE
 OF THIS SECTION AS TO WHICH A DETERMINING PERSON DOES NOT ELECT TO USE A
 RECOMMENDED BENCHMARK REPLACEMENT PURSUANT TO SUBDIVISION THREE OF  THIS
 SECTION  OR AS TO WHICH A DETERMINING PERSON ELECTS TO USE A RECOMMENDED
 BENCHMARK REPLACEMENT PRIOR TO THE OCCURRENCE OF A LIBOR  DISCONTINUANCE
 EVENT,  EXCEPT  THAT  SUCH  CONTRACT,  SECURITY,  OR INSTRUMENT SHALL BE
 SUBJECT TO SUBDIVISION TWO OF THIS SECTION; OR
   D. THE APPLICATION TO A RECOMMENDED BENCHMARK REPLACEMENT OF ANY  CAP,
 FLOOR,  MODIFIER,  OR  SPREAD ADJUSTMENT TO WHICH LIBOR HAD BEEN SUBJECT
 PURSUANT TO THE TERMS OF A CONTRACT, SECURITY, OR INSTRUMENT.
   6. NOTWITHSTANDING THE UNIFORM COMMERCIAL CODE OR  ANY  OTHER  LAW  OF
 THIS  STATE,  THIS  TITLE  SHALL  APPLY TO ALL CONTRACTS, SECURITIES AND
 INSTRUMENTS, INCLUDING CONTRACTS,  WITH  RESPECT  TO  COMMERCIAL  TRANS-
 ACTIONS,  AND  SHALL  NOT  BE DEEMED TO BE DISPLACED BY ANY OTHER LAW OF
 THIS STATE.
   § 18-402. CONTINUITY OF CONTRACT AND SAFE HARBOR. 1. THE SELECTION  OR
 USE  OF  A  RECOMMENDED BENCHMARK REPLACEMENT AS A BENCHMARK REPLACEMENT
 UNDER OR IN RESPECT OF A CONTRACT, SECURITY OR INSTRUMENT  BY  OPERATION
 OF SECTION 18-401 OF THIS ARTICLE SHALL CONSTITUTE:
   A.  A  COMMERCIALLY  REASONABLE  REPLACEMENT  FOR  AND  A COMMERCIALLY
 SUBSTANTIAL EQUIVALENT TO LIBOR;
   B. A REASONABLE, COMPARABLE OR ANALOGOUS TERM FOR LIBOR  UNDER  OR  IN
 RESPECT OF SUCH CONTRACT, SECURITY OR INSTRUMENT;
   C. A REPLACEMENT THAT IS BASED ON A METHODOLOGY OR INFORMATION THAT IS
 SIMILAR OR COMPARABLE TO LIBOR; AND
   D.  SUBSTANTIAL  PERFORMANCE  BY ANY PERSON OF ANY RIGHT OR OBLIGATION
 RELATING TO OR BASED ON LIBOR UNDER OR IN RESPECT OF A CONTRACT, SECURI-
 TY OR INSTRUMENT.
   2. NONE OF: A. A LIBOR DISCONTINUANCE EVENT  OR  A  LIBOR  REPLACEMENT
 DATE,  B. THE SELECTION OR USE OF A RECOMMENDED BENCHMARK REPLACEMENT AS
 A BENCHMARK REPLACEMENT; OR C.   THE  DETERMINATION,  IMPLEMENTATION  OR
 PERFORMANCE  OF  BENCHMARK REPLACEMENT CONFORMING CHANGES, IN EACH CASE,
 BY OPERATION OF SECTION 18-401 OF THIS ARTICLE, SHALL:
   (I) BE DEEMED TO IMPAIR OR AFFECT THE RIGHT OF ANY PERSON TO RECEIVE A
 PAYMENT, OR AFFECT THE AMOUNT OR  TIMING  OF  SUCH  PAYMENT,  UNDER  ANY
 CONTRACT, SECURITY, OR INSTRUMENT; OR
   (II)  HAVE THE EFFECT OF (A) DISCHARGING OR EXCUSING PERFORMANCE UNDER
 ANY CONTRACT, SECURITY OR INSTRUMENT FOR ANY REASON, CLAIM  OR  DEFENSE,
 INCLUDING,  BUT  NOT LIMITED TO, ANY FORCE MAJEURE OR OTHER PROVISION IN
 ANY CONTRACT, SECURITY OR INSTRUMENT; (B) GIVING ANY PERSON THE RIGHT TO
 UNILATERALLY TERMINATE OR SUSPEND PERFORMANCE UNDER ANY CONTRACT,  SECU-
 RITY OR INSTRUMENT; (C) CONSTITUTING A BREACH OF A CONTRACT, SECURITY OR
 INSTRUMENT;  OR  (D)  VOIDING  OR  NULLIFYING  ANY CONTRACT, SECURITY OR
 INSTRUMENT.
   3. NO PERSON SHALL HAVE ANY LIABILITY FOR DAMAGES TO ANY PERSON OR  BE
 SUBJECT  TO  ANY CLAIM OR REQUEST FOR EQUITABLE RELIEF ARISING OUT OF OR
 RELATED TO THE SELECTION OR USE OF A RECOMMENDED  BENCHMARK  REPLACEMENT
 OR   THE  DETERMINATION,  IMPLEMENTATION  OR  PERFORMANCE  OF  BENCHMARK

 A. 164--B                           6
 
 REPLACEMENT CONFORMING CHANGES, IN EACH CASE, BY  OPERATION  OF  SECTION
 18-401  OF  THIS  ARTICLE,  AND SUCH SELECTION OR USE OF THE RECOMMENDED
 BENCHMARK REPLACEMENT OR SUCH DETERMINATION IMPLEMENTATION  OR  PERFORM-
 ANCE  OF BENCHMARK REPLACEMENT CONFORMING CHANGES SHALL NOT GIVE RISE TO
 ANY CLAIM OR CAUSE OF ACTION BY ANY PERSON IN LAW OR IN EQUITY.
   4. THE SELECTION OR USE OF A RECOMMENDED BENCHMARK REPLACEMENT OR  THE
 DETERMINATION,  IMPLEMENTATION,  OR PERFORMANCE OF BENCHMARK REPLACEMENT
 CONFORMING CHANGES, BY OPERATION OF  SECTION  18-401  OF  THIS  ARTICLE,
 SHALL BE DEEMED TO:
   A.  NOT  BE  AN AMENDMENT OR MODIFICATION OF ANY CONTRACT, SECURITY OR
 INSTRUMENT; AND
   B. NOT PREJUDICE, IMPAIR OR AFFECT ANY PERSON'S RIGHTS,  INTERESTS  OR
 OBLIGATIONS UNDER OR IN RESPECT OF ANY CONTRACT, SECURITY OR INSTRUMENT.
   5.  EXCEPT  AS PROVIDED IN EITHER SUBDIVISION ONE OR SUBDIVISION THREE
 OF SECTION 18-401 OF THIS ARTICLE, THE PROVISIONS OF THIS ARTICLE  SHALL
 NOT  BE  INTERPRETED  AS  CREATING  ANY  NEGATIVE  INFERENCE OR NEGATIVE
 PRESUMPTION REGARDING THE VALIDITY OR ENFORCEABILITY OF:
   A. ANY BENCHMARK REPLACEMENT THAT IS  NOT  A  RECOMMENDED  REPLACEMENT
 BENCHMARK;
   B.  ANY  SPREAD ADJUSTMENT, OR METHOD FOR CALCULATING OR DETERMINING A
 SPREAD ADJUSTMENT, THAT IS NOT A RECOMMENDED SPREAD ADJUSTMENT; OR
   C. ANY CHANGES, ALTERATIONS OR MODIFICATIONS TO OR  IN  RESPECT  OF  A
 CONTRACT,  SECURITY  OR  INSTRUMENT  THAT  ARE NOT BENCHMARK REPLACEMENT
 CONFORMING CHANGES.
   § 18-403. SEVERABILITY. IF ANY PROVISION OF THIS ARTICLE  OR  APPLICA-
 TION THEREOF TO ANY PERSON OR CIRCUMSTANCE IS HELD INVALID, THE INVALID-
 ITY  SHALL  NOT  AFFECT OTHER PROVISIONS OR APPLICATIONS OF THIS ARTICLE
 THAT CAN BE GIVEN EFFECT WITHOUT THE INVALID PROVISION  OR  APPLICATION,
 AND TO THIS END THE PROVISIONS OF THIS ARTICLE SHALL BE SEVERABLE.
   § 2. This act shall take effect immediately.

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The New York State Senate

assembly Bill A164B

Sponsored By

Archive: Last Bill Status - Signed by Governor

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Votes

Mar 24, 2021 - floor Vote

Floor Vote: Mar 24, 2021

Bill Amendments

A164 - Details

A164 - Summary

A164 - Bill Text download pdf

A164A - Details

A164A - Summary

A164A - Bill Text download pdf

Co-Sponsors

A164B (ACTIVE) - Details

A164B (ACTIVE) - Summary

A164B (ACTIVE) - Bill Text download pdf

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assembly Bill A164B

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Sponsored By

ZEBROWSKI

Archive: Last Bill Status - Signed by Governor

Your Voice

Actions

Votes

Mar 24, 2021 - floor Vote

Floor Vote: Mar 24, 2021

Bill Amendments

A164 - Details

A164 - Summary

A164 - Bill Text download pdf

A164A - Details

A164A - Summary

A164A - Bill Text download pdf

Co-Sponsors

John T. McDonald III

Judy Griffin

Jenifer Rajkumar

A164B (ACTIVE) - Details

A164B (ACTIVE) - Summary

A164B (ACTIVE) - Bill Text download pdf

Comments