Jurisdiction(s):
Ireland

High Court of England and Wales confirms adjusted SOFR a reasonable USD Libor replacement in Standard Chartered preference share dividends; guidance for legacy debt without fallback provisions

Published on: 16 October 2024

Published by a Law360 reporter

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Article summary

The High Court has held that Standard Chartered’s suggested substitute for Libor, derived from the secured overnight financing rate (SOFR), amounts to a “reasonable alternative rate”, in one of the earliest matters to reach the English courts concerning the move away from the Libor benchmark. Judges Julian Flaux and David Foxton concluded that the bank’s proposed metric rests on “a well-established rate used across the financial markets in a variety of financial instruments” and has the backing of financial regulators in both the UK and the US. Having failed to reach agreement with its investors—including hedge funds managed by DE Shaw and Bracebridge—on the rate to be applied to US$750m of preference shares issued in 2006, Standard Chartered asked the court to determine the dividend rate it should pay...

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