2023 Tennessee Code › Title 47 - COMMERCIAL INSTRUMENTS AND TRANSACTIONS (§§ 47-1-101 — 47-50-121) › Chapter 33 - LIBOR DISCONTINUANCE AND REPLACEMENT ACT (§§ 47-33-101 — 47-33-104) › Section 47-33-103 - 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, is the benchmark replacement for a contract, security, or instrument that uses LIBOR as a benchmark and:
(1)
Contains no fallback provisions; or
(2)
Contains fallback provisions that result in a benchmark replacement, other than a recommended benchmark replacement, that is based in any way on a LIBOR value.
(b)
Following the effective date of this act, 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 an interest rate or dividend rate based on LIBOR must be disregarded as if not included in the contract, security, or instrument and are void.
(c)
(1)
This subsection (c) applies to a 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:
(A)
Is based in any way on a LIBOR value; or
(B)
Is the substantive equivalent of §
47-33-104(a)(1), (a)(2), or (a)(3)
.
(2)
A determining person has the authority under this chapter, but is not required, to select the recommended benchmark replacement as the benchmark replacement. The selection of the recommended benchmark replacement:
(A)
Is irrevocable;
(B)
Must be 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; and
(C)
Must be used in 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 a contract, security, or instrument pursuant to this section, then all benchmark replacement conforming changes that are applicable to the recommended benchmark replacement become an integral part of the contract, security, or instrument by operation of law.
(e)
This chapter does not alter or impair the following:
(1)
A written agreement by all requisite parties that, retrospectively or prospectively, provides, without necessarily referring specifically to this chapter, that a contract, security, or instrument is not subject to this chapter. For purposes of this subdivision (e)(1), "requisite parties" means all parties required to amend the terms and provisions of a contract, security, or instrument that otherwise would be altered or affected by this chapter;
(2)
A 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 is subject to subsection (b);
(3)
A 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 effective date of this act, except that the contract, security, or instrument is subject to subsection (b); and
(4)
The application to a recommended benchmark replacement of a 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 another law of this state, this chapter applies to all contracts, securities, and instruments, including contracts with respect to commercial transactions and is not displaced by another law of this state.
Added by 2022 Tenn. Acts, ch. 651, s 1, eff. 3/15/2022.