Florida Senate - 2022                        COMMITTEE AMENDMENT
       Bill No. SB 1246
       
       
       
       
       
       
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                              LEGISLATIVE ACTION                        
                    Senate             .             House              
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       The Committee on Banking and Insurance (Gruters) recommended the
       following:
       
    1         Senate Amendment (with title amendment)
    2  
    3         Delete everything after the enacting clause
    4  and insert:
    5         Section 1. Section 687.15, Florida Statutes, is created to
    6  read:
    7         687.15Benchmark replacements for the London Interbank
    8  Offered Rate.—
    9         (1)The Legislature finds that the discontinuation of the
   10  London Interbank Offered Rate (LIBOR) as a viable interest rate
   11  threatens the continued viability of certain contracts,
   12  securities, and instruments and the rights of the parties to
   13  those contracts, securities, or instruments. Furthermore, the
   14  threat of unknown and potentially unbounded liability and the
   15  viability of contracts, securities, and instruments threatens
   16  the state’s economy and has created an overpowering public
   17  necessity to provide an immediate and remedial legislative
   18  solution. Therefore, the Legislature intends for parties to
   19  certain contracts, securities, or instruments, as provided in
   20  this section, to enjoy heightened legal protections as a result
   21  of the discontinuation of LIBOR. The Legislature also finds that
   22  there are no alternative means to meet this public necessity.
   23  The Legislature finds that the public interest as a whole is
   24  best served by providing certainty to these contracts,
   25  securities, and instruments and the parties thereto, so that
   26  these contracts, securities, and instruments may remain viable
   27  and continue to be enforceable in the state.
   28         (2)As used in this section, the term:
   29         (a)“Benchmark” means an index of interest rates or
   30  dividend rates that is used, in whole or in part, as the basis
   31  of, or as a reference for, calculating or determining a
   32  valuation, payment, or other measurement under or with respect
   33  to a contract, security, or instrument.
   34         (b)“Benchmark replacement” means a benchmark, an interest
   35  rate, or a dividend rate that may or may not be based, in whole
   36  or in part, on a prior setting of LIBOR, to replace LIBOR or any
   37  interest rate or dividend rate based on LIBOR, whether on a
   38  temporary, permanent, or indefinite basis, under or with respect
   39  to a contract, security, or instrument.
   40         (c)“Benchmark replacement conforming change” means, with
   41  respect to any type of contract, security, or instrument, a
   42  technical, administrative, or operational change, alteration, or
   43  modification that is associated with and reasonably necessary to
   44  the use, adoption, calculation, or implementation of a
   45  recommended benchmark replacement and that has been selected or
   46  recommended by a relevant recommending body. However, if, in the
   47  reasonable judgment of a calculating person, the change,
   48  alteration, or modification selected or recommended by a
   49  relevant recommending body does not apply to the contract,
   50  security, or instrument or is insufficient to allow
   51  administration and calculation of the recommended benchmark
   52  replacement, the benchmark replacement conforming change may
   53  include other changes, alterations, or modifications that, in
   54  the reasonable judgment of the calculating person:
   55         1.Are necessary to allow administration and calculation of
   56  the recommended benchmark replacement under or with respect to
   57  the contract, security, or instrument in a manner consistent
   58  with market practice for substantially similar contracts,
   59  securities, or instruments and, to the extent practicable, the
   60  manner in which the contract, security, or instrument was
   61  administered immediately before the LIBOR replacement date.
   62         2.Would not result in a disposition of the contract,
   63  security, or instrument for federal income tax purposes.
   64         (d)“Calculating person” means, with respect to any
   65  contract, security, or instrument, a person responsible for
   66  calculating or determining a valuation, payment, or other
   67  measurement based on a benchmark. This person may be the
   68  determining person.
   69         (e)“Contract, security, or instrument” includes, without
   70  limitation, any contract, agreement, mortgage, deed of trust,
   71  lease, instrument, obligation, or security, whether representing
   72  debt or equity, and including any interest in a corporation,
   73  partnership, or limited liability company.
   74         (f)“Determining person” means, with respect to any
   75  contract, security, or instrument, the following persons in
   76  decreasing order of priority:
   77         1.A person so specified.
   78         2.A person with the authority, right, or obligation to do
   79  any of the following:
   80         a.Determine the benchmark replacement that will take
   81  effect on the LIBOR replacement date.
   82         b.Calculate or determine a valuation, payment, or other
   83  measurement based on a benchmark.
   84         c.Notify other persons of the occurrence of a LIBOR
   85  discontinuance event, a LIBOR replacement date, or a benchmark
   86  replacement.
   87         (g)“Fallback provision” means a term in a contract,
   88  security, or instrument which sets forth a methodology or
   89  procedure for determining a benchmark replacement, including any
   90  term relating to the date on which the benchmark replacement
   91  becomes effective, without regard to whether a benchmark
   92  replacement can be determined in accordance with the methodology
   93  or procedure.
   94         (h)“LIBOR” means, for purposes of the application of this
   95  section to any particular contract, security, or instrument, the
   96  United States dollar LIBOR, formerly known as the London
   97  Interbank Offered Rate, as administered by ICE Benchmark
   98  Administration, or any predecessor or successor thereof, or any
   99  tenor thereof, as applicable, that is used in making any
  100  calculation or determination of benchmark rates.
  101         (i)1.“LIBOR discontinuance event” means the earliest to
  102  occur of any of the following:
  103         a.A public statement or publication of information by, or
  104  on behalf of, the administrator of LIBOR announcing that the
  105  administrator has ceased or will cease to provide LIBOR
  106  permanently or indefinitely, if, at the time of the statement or
  107  publication, there is no successor administrator that will
  108  continue to provide LIBOR.
  109         b.A public statement or publication of information by the
  110  regulatory supervisor for the administrator of LIBOR, the
  111  Federal Reserve System, an insolvency official with jurisdiction
  112  over the administrator of LIBOR, a resolution authority with
  113  jurisdiction over the administrator of LIBOR, or a court or an
  114  entity with similar insolvency or resolution authority over the
  115  administrator of LIBOR, announcing that the administrator of
  116  LIBOR has ceased or will cease to provide LIBOR permanently or
  117  indefinitely, if, at the time of the statement or publication,
  118  there is no successor administrator that will continue to
  119  provide LIBOR.
  120         c.A public statement or publication of information by the
  121  regulatory supervisor for the administrator of LIBOR announcing
  122  that LIBOR is no longer representative.
  123         2.A public statement or publication of information that
  124  affects one or more tenors of LIBOR does not constitute a LIBOR
  125  discontinuance event with respect to a contract, security, or
  126  instrument that:
  127         a.Provides for only one tenor of LIBOR, if the contract,
  128  security, or instrument requires interpolation and the tenor can
  129  be interpolated from LIBOR tenors that are not so affected; or
  130         b.Allows a party to choose from more than one tenor of
  131  LIBOR and any of the tenors is not so affected or, if the
  132  contract, security, or instrument requires interpolation, can be
  133  interpolated from LIBOR tenors that are not so affected.
  134         (j)1.“LIBOR replacement date” means:
  135         a.In the case of a LIBOR discontinuance event described in
  136  sub-subparagraph (i)1.a. or sub-subparagraph (i)1.b., the later
  137  of:
  138         (I)The date of the public statement or publication of
  139  information referenced in sub-subparagraph (i)1.a. or sub
  140  subparagraph (i)1.b.; or
  141         (II)The date on which the administrator of LIBOR
  142  permanently or indefinitely ceases to provide LIBOR.
  143         b.In the case of a LIBOR discontinuance event described in
  144  sub-subparagraph (i)1.c., the date of the public statement or
  145  publication of information referenced in sub-subparagraph
  146  (i)1.c.
  147         2.A date that affects one or more tenors of LIBOR does not
  148  constitute a LIBOR replacement date with respect to a contract,
  149  security, or instrument that:
  150         a.Provides for only one tenor of LIBOR, if the contract,
  151  security, or instrument requires interpolation and the tenor can
  152  be interpolated from LIBOR tenors that are not so affected; or
  153         b.Allows a party to choose from more than one tenor of
  154  LIBOR and any of the tenors is not so affected or, if the
  155  contract, security, or instrument requires interpolation, can be
  156  interpolated from LIBOR tenors that are not so affected.
  157         (k)“Recommended benchmark replacement” means, with respect
  158  to any particular type of contract, security, or instrument, a
  159  benchmark replacement based on SOFR that must include any
  160  recommended spread adjustment and any benchmark replacement
  161  conforming change that have been selected or recommended by a
  162  relevant recommending body with respect to the type of contract,
  163  security, or instrument.
  164         (l)“Recommended spread adjustment” means a spread
  165  adjustment, or method for calculating or determining the spread
  166  adjustment, which has been selected or recommended by a relevant
  167  recommending body for a recommended benchmark replacement for a
  168  particular type of contract, security, or instrument and for a
  169  particular term to account for the effects of the transition or
  170  change from LIBOR to a recommended benchmark replacement. This
  171  term may be a positive or negative value or zero.
  172         (m)“Relevant recommending body” means the Federal Reserve
  173  Board, the Federal Reserve Bank of New York, the Alternative
  174  Reference Rates Committee, or a successor to any of them.
  175         (n)“SOFR” means, with respect to any day, the secured
  176  overnight financing rate published for the day by the Federal
  177  Reserve Bank of New York as the administrator of the benchmark,
  178  or a successor administrator, on the Federal Reserve Bank of New
  179  York’s website.
  180         (3)On the LIBOR replacement date, the recommended
  181  benchmark replacement, by operation of law, shall be the
  182  benchmark replacement for a contract, security, or instrument
  183  that uses LIBOR as a benchmark and that:
  184         (a)Does not contain a fallback provision; or
  185         (b)Contains fallback provisions resulting in a benchmark
  186  replacement, other than a recommended benchmark replacement,
  187  that is based in any way on a LIBOR value.
  188         (4)After the occurrence of a LIBOR discontinuance event,
  189  any fallback provisions in a contract, security, or instrument
  190  which provide for a benchmark replacement based on or otherwise
  191  involving a poll, survey, or inquiry for quotes or information
  192  concerning interbank lending rates or any interest rate or
  193  dividend rate based on LIBOR shall be void and of no force or
  194  effect.
  195         (5)(a)A determining person may, but is not required to,
  196  select the recommended benchmark replacement as the benchmark
  197  replacement after the occurrence of a LIBOR discontinuance
  198  event. The selection of the recommended benchmark replacement
  199  must be:
  200         1.Irrevocable;
  201         2.Made by the earlier of the LIBOR replacement date or the
  202  latest date for selecting a benchmark replacement according to
  203  the contract, security, or instrument; and
  204         3.Used in any determination of the benchmark under or with
  205  respect to the contract, security, or instrument occurring on
  206  and after the LIBOR replacement date.
  207         (b)Paragraph (a) applies to a contract, security, or
  208  instrument that uses LIBOR as a benchmark and that contains
  209  fallback provisions allowing or requiring the selection of a
  210  benchmark replacement that is:
  211         1.Based in any way on a LIBOR value; or
  212         2.The substantive equivalent of paragraph (7)(a),
  213  paragraph (7)(b), or paragraph (7)(c).
  214         (6)If a recommended benchmark replacement becomes the
  215  benchmark replacement for a contract, security, or instrument
  216  under this section, then all benchmark replacement conforming
  217  changes that are applicable to the recommended benchmark
  218  replacement must become an integral part of the contract,
  219  security, or instrument by operation of law.
  220         (7)The selection or use of a recommended benchmark
  221  replacement as a benchmark replacement under or with respect to
  222  a contract, security, or instrument by operation of this section
  223  constitutes all of the following:
  224         (a)A commercially reasonable replacement for and a
  225  commercially substantial equivalent to LIBOR.
  226         (b)A reasonable, comparable, or analogous term for LIBOR
  227  under or with respect to the contract, security, or instrument.
  228         (c)A replacement that is based on a methodology or
  229  information that is similar or comparable to LIBOR.
  230         (d)Substantial performance by any person of any right or
  231  obligation relating to or based on LIBOR under or with respect
  232  to a contract, security, or instrument.
  233         (8)A LIBOR discontinuance event, a LIBOR replacement date,
  234  the selection or use of a recommended benchmark replacement as a
  235  benchmark replacement, or the determination, implementation, or
  236  performance of a benchmark replacement conforming change, in
  237  each case, by operation of this section, may not:
  238         (a)Be deemed to impair or affect the right of any person
  239  to receive a payment, or affect the amount or timing of the
  240  payment, under a contract, security, or instrument;
  241         (b)Have the effect of discharging or excusing performance
  242  under a contract, security, or instrument for any reason, claim,
  243  or defense, including, but not limited to, any force majeure or
  244  other provision in a contract, security, or instrument;
  245         (c)Have the effect of giving any person the right to
  246  unilaterally terminate or suspend performance under a contract,
  247  security, or instrument;
  248         (d)Have the effect of constituting a breach of a contract,
  249  security, or instrument; or
  250         (e)Have the effect of voiding or nullifying a contract,
  251  security, or instrument.
  252         (9)A person is not liable for damages to any other person,
  253  and is not subject to any claim or request for equitable relief,
  254  arising out of or related to the selection or use of a
  255  recommended benchmark replacement or the determination,
  256  implementation, or performance of a benchmark replacement
  257  conforming change, in each case, by operation of this section.
  258  The selection or use of the recommended benchmark replacement or
  259  the determination, implementation, or performance of a benchmark
  260  replacement conforming change may not give rise to any claim or
  261  cause of action by any person in law or in equity.
  262         (10)The selection or use of a recommended benchmark
  263  replacement or the determination, implementation, or performance
  264  of a benchmark replacement conforming change, by operation of
  265  this section, may not be deemed to:
  266         (a)Be an amendment or modification of a contract,
  267  security, or instrument.
  268         (b)Prejudice, impair, or affect a person’s rights,
  269  interests, or obligations under or with respect to a contract,
  270  security, or instrument.
  271         (11)Except as provided in subsection (3) or subsection
  272  (5), this section may not be interpreted as creating a negative
  273  inference or negative presumption regarding the validity or
  274  enforceability of any of the following:
  275         (a)A benchmark replacement that is not a recommended
  276  benchmark replacement.
  277         (b)A spread adjustment, or method for calculating or
  278  determining a spread adjustment, which is not a recommended
  279  spread adjustment.
  280         (c)A change, alteration, or modification to or with
  281  respect to a contract, security, or instrument which is not a
  282  benchmark replacement conforming change.
  283         (12) This section does not alter or impair any of the
  284  following:
  285         (a) A written agreement by all requisite parties which,
  286  retrospectively or prospectively, provides that a contract,
  287  security, or instrument is not subject to this section without
  288  necessarily referring specifically to this section. As used in
  289  this paragraph, the term “requisite parties” means all parties
  290  required to amend the terms and provisions of a contract,
  291  security, or instrument that would otherwise be altered or
  292  affected by this section.
  293         (b) A contract, security, or instrument that contains
  294  fallback provisions that would result in a benchmark replacement
  295  that is not based on LIBOR, including, but not limited to, the
  296  prime rate or the federal funds rate. However, the contract,
  297  security, or instrument is subject to subsection (4).
  298         (c) A contract, security, or instrument subject to
  299  subsection (5) as to which a determining person does not elect
  300  to use a recommended benchmark replacement or as to which a
  301  determining person elects to use a recommended benchmark
  302  replacement before the occurrence of a LIBOR discontinuance
  303  event. However, the contract, security, or instrument is subject
  304  to subsection (4).
  305         (d) The application to a recommended benchmark replacement
  306  of any cap, floor, modifier, or spread adjustment to which LIBOR
  307  had been subject pursuant to the terms of a contract, security,
  308  or instrument.
  309         (13) Notwithstanding the Uniform Commercial Code or any
  310  other law of this state, and except as otherwise provided in
  311  this section, this section applies to all contracts, securities,
  312  and instruments, including contracts with respect to commercial
  313  transactions, and may not be superseded by any other law of this
  314  state.
  315         Section 2. This act is remedial in nature and applies
  316  retroactively to all contracts, agreements, mortgages, deeds of
  317  trust, leases, instruments, obligations, or securities, whether
  318  representing debt or equity, and including all interests in a
  319  corporation, partnership, or limited liability company, in
  320  existence on December 31, 2021.
  321         Section 3. This act shall take effect upon becoming a law.
  322  
  323  ================= T I T L E  A M E N D M E N T ================
  324  And the title is amended as follows:
  325         Delete everything before the enacting clause
  326  and insert:
  327                        A bill to be entitled                      
  328         An act relating to benchmark replacements for London
  329         Interbank Offered Rate; creating s. 687.15, F.S.;
  330         providing legislative findings and intent and a
  331         statement of public interest; providing definitions;
  332         requiring that recommended benchmark replacements
  333         selected or recommended by specified persons be
  334         benchmark replacements on the United States dollar
  335         London Interbank Offered Rate (LIBOR) replacement date
  336         for certain contracts, securities, and instruments;
  337         requiring certain fallback provisions in contracts,
  338         securities, and instruments providing specified
  339         benchmark replacements to be disregarded and void;
  340         authorizing specified persons to select benchmark
  341         replacements under certain circumstances; providing
  342         requirements for such selection; providing
  343         applicability; requiring benchmark replacement
  344         conforming changes to become an integral part of
  345         contracts, securities, and instruments under certain
  346         circumstances; providing construction; providing that
  347         a person is not liable for damages and is not subject
  348         to claims and requests for equitable relief under
  349         certain circumstances; providing applicability;
  350         prohibiting other laws from superseding specified
  351         provisions; providing that the act is remedial in
  352         nature; providing retroactive applicability; providing
  353         an effective date.