COVID-19 has not stopped the need to plan for the LIBOR transition. In fact, appropriate planning and action has become even more urgent. For this reason, CDS and Greenpoint Financial co-hosted the virtual event LIBOR Summit 2020 – Litigation and Documentation in April to bring together experts to provide updates and advice to organizations, regulators, and counsel. Those experts included our keynote speakers Tom Wipf, Chair of the Alternative Reference Rate Committee (ARRC); Tom Deas, Chair of the National Association of Corporate Treasurers (NACT); and Michael Hausfeld, Chair of Hausfeld law firm. John “Jeb” Beckwith, Managing Director of Greenpoint Financial Services and I moderated the sessions.
The CLE-accredited Summit began with a Keynote address from Tom Wipf. As chair of the ARRC, Tom walked us through the latest developments, including the ARRC’s proposed New York legislation. A copy of a memorandum summarizing that legislation and the text is available here. If enacted, that law would help “minimize costly and disruptive litigation by providing legal certainty for the issues that are likely to arise under New York law.” Of course, Tom addressed the issue of timing. With LIBOR “likely to cease” at the end of 2021, the need for a robust and transaction-based alternative rate is growing more urgent.
Our next panel addressed the litigation risks associated with the LIBOR transition. Michael Hausfeld, co-lead counsel in both LIBOR and the Foreign Exchange, introduced us to the high stakes for parties impacted by LIBOR and its transition, and emphasized the important role of regulators in the transition. Our next speaker, Michael Spafford, partner with Paul Hastings and counsel of record in LIBOR matters in the U.S. District Court for the Southern District of New York, discussed what he sees from regulatory bodies that oversee financial transactions in which LIBOR has become so embedded.
Michael Spafford also led the discussion of specific litigation risks. He addressed the challenges arising from “ambiguous language,” especially from the bespoke language many contracts contain relating to LIBOR provisions. Also on the panel, Sidley Austin partner Isaac Greany highlighted the importance of accurate and timely communication and reporting in the context of LIBOR to meet disclosure and fiduciary duties. Finally, Nowell Bamberger, a partner with Cleary Gottlieb walked us through potential contract theories of liability that may come to the fore if the replacement for LIBOR creates “mismatch economics” with winners and losers.
Our final panel was led by Tom Deas, Chairman of the NACT. Tom pointed out that in addition to derivatives and other financial instruments, LIBOR terms have become embedded in corporate contracts including procurement contracts (especially those with lengthy terms) and even Human Resource related contracts. Tom cited his extensive experience as Corporate Treasurer to outline the complexity of a LIBOR Transition program for remediating corporate contract portfolios.
Fortunately, we also heard from legal and technology experts who are helping clients solve the LIBOR challenge. Joyce Xu from Paul Hastings stressed the need for a well-planned and organized LIBOR Transition program. She identified 10 “must-have” ingredients of an effective LIBOR plan. We ended with an overview by Michael Boehner of Cleary Gottlieb and Chris O’Connor of CDS of the technology solutions that will be critical to identifying and amending the contracts with LIBOR provisions, which are valued in the hundreds of trillions of dollars. LIBOR will require the most advanced legal technologies that combine artificial intelligence and analytics-augmented contract review tools.
Clearly, the Litigation and Documentation session packed a great deal of information into one program. Two more LIBOR Summit sessions (dates/times to be announced shortly) will take a deeper dive into the current status of efforts related to an alternative reference rate as well as more information from legal and technology experts on how to address LIBOR. Follow CDS on LinkedIn and Twitter, where we will announce updates, or to be added to the contact list, contact .
Thanks again to all our speakers and panelists and special thanks to everyone who attended and contributed such great questions and feedback.