Ala. Code § 5-28-1 Short Title.
5-28-1. Short Title.
This chapter shall be known and may be cited as the LIBOR Discontinuance and Replacement Act of 2021.
(Act 2021-323, §1.)
LIBOR Discontinuance and Labor Replacement Act of 2021
Ala. Code tit. 5, ch. 28
in effectAla. Code § 5-28-2 Definitions.
5-28-2. Definitions.
As used in this chapter, the following terms shall have the following meanings:
(1) BENCHMARK. 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.
(2) BENCHMARK REPLACEMENT. 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 dividend rate based on LIBOR, whether on a temporary, permanent, or indefinite basis, under or in respect of a contract, security, or instrument.
(3) BENCHMARK REPLACEMENT CONFORMING CHANGES. With respect to any type of contract, security, or instrument, any technical, administrative, or operational changes, alterations, or modifications that are associated with and reasonably necessary to the use, adoption, calculation, or implementation of a recommended benchmark replacement and that both:
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 pursuant to paragraph a. do not apply to the contract, security, or instrument or are insufficient to permit administration and calculation of the recommended benchmark replacement, then benchmark replacement conforming changes shall include other changes, alterations, or modifications that, in the reasonable judgment of the calculating person, are necessary to permit administration and calculation of the recommended benchmark replacement under or in respect of the 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 the contract, security, or instrument was administered immediately prior to the LIBOR replacement date; and would not result in a disposition of the contract, security, or instrument for U.S. federal income tax purposes.
(4) CALCULATING PERSON. With respect to any contract, security, or instrument, any person responsible for calculating or determining any valuation, payment, or other measurement based on a benchmark. This person may be the determining person.
(5) CONTRACT, SECURITY, OR INSTRUMENT. Includes, without limitation, any contract, agreement, mortgage, deed of trust, lease, instrument, other obligation, or security, whether representing debt or equity, and including any interest in a corporation, a partnership, or a limited liability company.
(6) DETERMINING PERSON. With respect to any contract, security, or instrument, in the following order of priority:
a. Any person so specified.
b. Any person with the authority, right, or obligation to do any of the following:
1. Determine the benchmark replacement that will take effect on the LIBOR replacement date.
2. Calculate or determine a valuation, payment, or other measurement based on a benchmark.
3. Notify other persons of the occurrence of a LIBOR discontinuance event, a LIBOR replacement date, or a benchmark replacement.
(7) FALLBACK PROVISIONS. 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 the methodology or procedure.
(8) LIBOR. For purposes of the application of this chapter 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.
(9) LIBOR DISCONTINUANCE EVENT. 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 the 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.
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 administrator 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.
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 definition, 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 does either of the following:
1. Provides for only one tenor of LIBOR, if the contract, security, or instrument requires interpolation and the tenor can be interpolated from LIBOR tenors that are not so affected.
2. Permits a party to choose from more than one tenor of LIBOR and any of the tenors is not so affected or if the contract, security, or instrument requires interpolation, can be interpolated from LIBOR tenors that are not so affected.
(10)a. LIBOR REPLACEMENT DATE. In the case of a LIBOR discontinuance event described in paragraph (9)a. or (9)b., the later of:
1. The date of the public statement or publication of information referenced therein.
2. The date on which the administrator of LIBOR permanently or indefinitely ceases to provide LIBOR.
b. In the case of a LIBOR discontinuance event described in paragraph (9)c., the date of the public statement or publication of information referenced therein. For purposes of this chapter, 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 does either of the following:
1. Provides for only one tenor of LIBOR, if the contract, security, or instrument requires interpolation and the tenor can be interpolated from LIBOR tenors that are not so affected.
2. Permits a party to choose from more than one tenor of LIBOR and any of the tenors is not so affected, or if the contract, security, or instrument requires interpolation, can be interpolated from LIBOR tenors that are not so affected.
(11) RECOMMENDED BENCHMARK REPLACEMENT. 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 the type of contract, security, or instrument.
(12) RECOMMENDED SPREAD ADJUSTMENT. A spread adjustment, or method for calculating or determining the spread adjustment, that shall have been selected or recommended by a relevant recommending body for a recommended benchmark replacement for a particular type of contract, security, or instrument and for a particular term to account for the effects of the transition or change from LIBOR to a recommended benchmark replacement. This term may be a positive or negative value or zero.
(13) RELEVANT RECOMMENDING BODY. The Federal Reserve Board, the Federal Reserve Bank of New York, or the Alternative Reference Rates Committee, or any successor to any of them.
(14) SOFR. With respect to any day, the secured overnight financing rate published for the day by the Federal Reserve Bank of New York, as the administrator of the benchmark, or a successor administrator, on the Federal Reserve Bank of New York’s website.
(Act 2021-323, §1.)
Ala. Code § 5-28-3 Recommended Benchmark Replacement for Certain Contracts, Securities, or Instruments; Fallback Provisions.
5-28-3. Recommended Benchmark Replacement for Certain Contracts, Securities, or Instruments; Fallback Provisions.
(a) On the LIBOR replacement date, the recommended benchmark replacement, by operation of law, shall be the benchmark replacement for any contract, security, or instrument that uses LIBOR as a benchmark and meets one of the following requirements:
(1) Contains no fallback provisions.
(2) 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.
(b) 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 the contract, security, or instrument and shall be deemed void and without any force or effect.
(c)(1) This subsection 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 either of the following:
a. Based in any way on any LIBOR value.
b. The substantive equivalent of subdivision (a)(1), (a)(2), or (a)(3) of Section 5-28-4.
(2) A determining person shall have the authority under this chapter, 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. The selection of the recommended benchmark replacement shall be all of the following:
a. Irrevocable.
b. Made by the earlier of either the LIBOR replacement date, or the latest date for selecting a benchmark replacement according to the contract, security, or instrument.
c. Used in any determinations of the benchmark under or with respect to the contract, security, or instrument occurring on and after the LIBOR replacement date.
(d) If a recommended benchmark replacement becomes the benchmark replacement for any contract, security, or instrument pursuant to this section, then all benchmark replacement conforming changes that are applicable to the recommended benchmark replacement shall become an integral part of the contract, security, or instrument by operation of law.
(e) This chapter shall not alter or impair any of the following:
(1) Any written agreement by all requisite parties that, retrospectively or prospectively, a contract, security, or instrument shall not be subject to this chapter without necessarily referring specifically to this chapter. For purposes of this subsection, “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 chapter.
(2) 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 the contract, security, or instrument shall be subject to subsection (b).
(3) Any contract, security, or instrument subject to subsection (c) as to which a determining person does not elect to use a recommended benchmark replacement 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 the contract, security, or instrument shall be subject to subsection (b).
(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.
(f) Notwithstanding the uniform commercial code or any other law of this state, this chapter 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.
(Act 2021-323, §1.)
Ala. Code § 5-28-4 Construction and Effect of Selection or Use of a Recommended Benchmark Replacement; Liability.
5-28-4. Construction and Effect of Selection or Use of a Recommended Benchmark Replacement; Liability.
(a) 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 5-28-3 shall constitute all of the following:
(1) A commercially reasonable replacement for and a commercially substantial equivalent to LIBOR.
(2) A reasonable, comparable, or analogous term for LIBOR under or in respect of the contract, security, or instrument.
(3) A replacement that is based on a methodology or information that is similar or comparable to LIBOR.
(4) Substantial performance by any person of any right or obligation relating to or based on LIBOR under or in respect of a contract, security, or instrument.
(b) None of: a LIBOR discontinuance event, a LIBOR replacement date, the selection or use of a recommended benchmark replacement as a benchmark replacement, or the determination, implementation, or performance of benchmark replacement conforming changes, in each case, by operation of Section 5-28-3, shall do any of the following:
(1) Be deemed to impair or affect the right of any person to receive a payment, or affect the amount or timing of the payment, under any contract, security, or instrument.
(2) Have the effect of 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.
(3) Have the effect of giving any person the right to unilaterally terminate or suspend performance under any contract, security, or instrument.
(4) Have the effect of constituting a breach of a contract, security, or instrument.
(5) Have the effect of voiding or nullifying any contract, security, or instrument.
(c) 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 5-28-3, and the selection or use of the recommended benchmark replacement or the determination, 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 selection or use of a recommended benchmark replacement or the determination, implementation, or performance of benchmark replacement conforming changes, by operation of Section 5-28-3, shall be deemed to do both of the following:
(1) Not be an amendment or modification of any contract, security, or instrument.
(2) Not prejudice, impair, or affect any person’s rights, interests, or obligations under or in respect of any contract, security, or instrument.
(e) Except as provided in either subsection (a) or subsection (c) of Section 5-28-3, this chapter shall not be interpreted as creating any negative inference or negative presumption regarding the validity or enforceability of any of the following:
(1) Any benchmark replacement that is not a recommended replacement benchmark.
(2) Any spread adjustment, or method for calculating or determining a spread adjustment, that is not a recommended spread adjustment.
(3) Any changes, alterations, or modifications to or in respect of a contract, security, or instrument that are not benchmark replacement conforming changes.
(Act 2021-323, §1.)
Ala. Code § 5-28-5 Severability.
5-28-5. Severability.
If any provision of this chapter or application thereof to any person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of this chapter that can be given effect without the invalid provision or application, and to this end the provisions of this chapter shall be severable.
(Act 2021-323, §1.)
Source: Alabama Legislature (alison.legislature.state.al.us)URL: https://alison.legislature.state.al.us/code-of-alabamaFetched: 10/20/2026