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This entry was published on 2021-04-09
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SECTION 18-401
Effect of LIBOR discontinuance on agreements
General Obligations (GOB) CHAPTER 24-A, ARTICLE 18-C
§ 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,
security or instrument that uses LIBOR as a benchmark and:

a. contains no fallback provisions; or

b. contains fallback provisions that result in a benchmark
replacement, 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
fallback 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
instrument 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
benchmark replacement. Such selection of the recommended benchmark
replacement 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
subdivision 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,
retrospectively 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 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
transactions, and shall not be deemed to be displaced by any other law
of this state.