SB279 Alabama 2021 Session

Summary

Primary Sponsor

Dan RobertsSenator

Republican

Co-Sponsors

Sam GivhanArthur OrrShay ShelnuttBobby D. SingletonRodger SmithermanJ.T. Waggoner

Session

Regular Session 2021

Title

Financial transactions, contingencies provided if the London Interbank Offered Rate is discontinued, Secs. 5-28-1 to 5-28-5, inclusive, added

Summary

Alabama SB279 creates the LIBOR Discontinuance and Replacement Act to replace LIBOR with a SOFR-based benchmark and protect contract performance when LIBOR is discontinued.

What This Bill Does

It prevents parties from refusing to perform or claiming a breach just because LIBOR ends or a replacement rate is used. It sets up a framework to replace LIBOR with a recommended benchmark (SOFR-based) and requires related conforming changes to be applied to contracts automatically. It provides a safe harbor from litigation for using the recommended replacement and requires that any fallback provisions tied to LIBOR be disregarded if they rely on LIBOR values. It also defines who decides the replacement and when the replacement takes effect, and ensures the replacement is commercially reasonable and substantially equivalent to LIBOR.

Who It Affects

• Parties to contracts, securities, or instruments that reference LIBOR would be protected from breach or non-performance claims due to LIBOR discontinuance and would transition to a SOFR-based replacement on the LIBOR replacement date.
• Calculating and determining persons (such as lenders, banks, borrowers, and other parties responsible for calculating or selecting benchmarks) would have authority to select and implement the replacement, with an irrevocable decision by specified deadlines, and the related conforming changes would become part of the contract.

Key Provisions

• Adds Chapter 28 to Title 5, establishing the LIBOR Discontinuance and Replacement Act of 2021, prohibiting refusal to perform or breach declarations due to LIBOR discontinuance and providing a safe harbor for using the recommended replacement.
• Defines key terms including Benchmark, Benchmark Replacement (SOFR-based), Benchmark Replacement Conforming Changes, Calculating Person, Determining Person, LIBOR, LIBOR Discontinuance Event, LIBOR Replacement Date, Recommended Benchmark Replacement (based on SOFR), Recommended Spread Adjustment, and Relevant Recommending Body.
• On the LIBOR replacement date, the recommended benchmark replacement becomes the benchmark for contracts without acceptable fallback provisions or with fallbacks tied to LIBOR values; fallbacks based on quotes or polls related to LIBOR are void after a LIBOR discontinuance event.
• Requires an irrevocable selection of the recommended benchmark replacement by the Determining Person by the LIBOR replacement date (or contract deadline) and provides that conforming changes are automatically incorporated into the contract; it also clarifies that such actions do not modify the contract, do not create breach, and are immune from liability, with severability and immediate effectiveness.

AI-generated summary using openai/gpt-5-nano on Feb 23, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Financial Institutions