On December 8, 2021, the US House of Representatives passed H.R. 4616, the Adjustable Interest Rate (LIBOR) Act of 2021 (Bill). The Bill provides for the transition of certain financial contracts away from LIBOR to a replacement rate selected by the Board of Governors of the Federal Reserve System for situations where contracts that reference LIBOR do not have a fallback or replacement rate provision in effect when LIBOR is retired. The Bill also provides for conforming changes to contracts referencing LIBOR, the continuity and enforceability of these contracts, and protections against liability. Tax consequences of LIBOR transition are also addressed by the Bill.

On December 9, 2021, the Alternative Reference Rates Committee (ARRC) released a statement in which it welcomed passage of the Bill. The ARRC believes the Bill will minimize the risk of disruptive litigation and adverse economic impacts associated with LIBOR transition and provide certainty to market participants.

The Bill now moves to the Senate for consideration.

For more information on the LIBOR transition, see Practice Note, What's Market: LIBOR Interest Rate Provisions and LIBOR Replacement Toolkit.