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Clifford Chance

Clifford Chance
Briefings

Briefings

LIBOR cessation: English court implies "Reasonable Rate" term into perpetual Preference Shares

22 October 2024

Where contracts do not contemplate LIBOR cessation, the market has been transitioning LIBOR-referenced contracts to newer risk-free rates by agreeing amendments to the documentation. But what if a counterparty will not transition? Should a term be implied or should the product be redeemed?

That was the choice for the English Court in Standard Chartered PLC v Guaranty Nominees Limited and Ors [2024] EWHC 265, in an eagerly-awaited "test case".

The Court implied a term - a decision that has been largely welcomed by the financial markets. But, as ever there is nuance. In this briefing we consider implications for other products, and how the facts of the case may have impacted the Court's decision in this instance.

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