On March 6, 2020, the ARRC released a proposal for New York State Legislation, which the ARRC states is intended to minimize legal uncertainty and adverse economic impacts associated with LIBOR transition.

According to the ARRC, the proposed legislation would: (i) prohibit a contract party from refusing to perform its contractual obligations or declaring a breach of contract as a result of LIBOR discontinuance or the use of the legislation’s recommended benchmark replacement, (ii) establish that the recommended benchmark replacement is a commercially reasonable substitute for and a commercially substantial equivalent to LIBOR, and (iii) provide a safe harbor from litigation for the use of the recommended benchmark replacement.

The proposed legislation would not override existing contract language that specifies a non-LIBOR based rate as a fallback to LIBOR(e.g., the Prime rate).

The ARRC indicated that, in the coming weeks, it plans to host a webinar to provide an in-depth overview of the proposed legislation, with details relating to the webinar to be published separately on the ARRC’s website.

References:

ARRC press release relating to its legislative proposal

ARRC draft legislative proposal text and related commentary and case studies