Tough legacy contracts slow transition away from Libor – Abdulali Jiwaji

By Abdulali Jiwaji

Partner Abdulali Jiwaji comments in Global Risk Regulator regarding the transition issues in the process of moving away from Libor to risk-free rates.

Abdulali’s comments were published in Global Risk Regulator, 8 March 2021, and can be found here.

“Letting go of “the world’s most important number” – Libor – is proving harder than regulators had hoped, and new draft laws designed to settle “tough legacy” contracts are no panacea.”

Partner Abdulali Jiwaji commented,  “As time is running out, it is critical for institutions to take the necessary steps to deal with LIBOR transitioning.  Contractual counterparties will need to go through a process of renegotiation of terms, and recording of formal amendments where necessary.  Where that process leads to a shift in the dynamics of contract obligations, impacting on one party’s financial position adversely, this may well give rise to legal claims.  Again, where there is an imbalance in the position of the parties, with one more sophisticated than the other, misselling type allegations will emerge.  A rigorous approach to the handling of these types of renegotiations, and the compliance safeguards, will be important for the management of litigation risk.”

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