Privacy is Front and Center -
Time to Review Your Practices
2018 has highlighted the importance of privacy and cyber security.  In May the European Union’s General Data Protection Regulation (“GDPR”) became effective.  If you are a United States-based company that conducts business with the European Union (“EU”), then GDPR and the Privacy Shield likely apply to your business.  If you conduct business in other countries, such as China, you should familiarize yourself with the laws of those jurisdictions to ensure that your interactions with those nations’ citizens comply with local laws and that your company’s privacy policies and procedures consider the same.

Even if you do not conduct business in the EU or outside of the United States, you should review the privacy notices and terms of use on your company’s website and how you communicate to consumers and the public.  The EU has long been a leader in establishing privacy rights.  Some of those GDPR rules and laws have already been adopted by jurisdictions in the United States.
For example, in June 2018, California Governor Jerry Brown signed into law the California Consumer Privacy Act (“CaCPA”), which has been referred to as the “toughest online privacy law” and most “sweeping data privacy bill” in the United States.  The CaCPA largely incorporated the GDPR into California law, and we expect the CaCPA to be considered by other states.  Apple, which is domiciled in California, recently expressed views that it would be comfortable if GDPR privacy laws became applicable to it.
Another recent development in privacy was the enactment of the Colorado Protections for Privacy Act (“CPPA”), which was signed into law in May.  CPPA was referred to as “among the most demanding [data protection laws] in the country” and will impose significant requirements and obligations on companies who conduct business with Colorado residents.
Alabama, New Mexico and South Carolina also passed data breach notification laws.  All fifty states and the District of Columbia have laws in place requiring companies to notify individuals when their personal information is exposed as a result of a data breach.
Much has changed on the privacy front during 2018, creating additional obligations and duties for organizations.  We suggest you review your privacy practices and consider having LLF perform a “cyber tune-up” to make sure that you are well positioned to respond to the ever-changing privacy landscape.  2019 likely will be even more active in this area.
For more information regarding this topic, please contact Dan Cotter at

Court Limit Collectability Against Tenants in Default
In a blow to commercial real estate investors dealing with defaulting tenants, the Illinois Appellate Court, in case  1002 E. 87th St. LLC v. Midway Broad. Corp ., ruled that a landlord who acquired a property has no standing to sue a tenant for rent if it was due and owing to the prior landlord before the consummation of the sale of the property.   The court held that the right to collect past due rent is not freely assignable in the assignment of a lease. 

This is a major issue to consider for all prospective purchasers of real estate. Tenants that owe past due rent to a property owner essentially receive a “fresh start” with respect to the new landlord. How a prospective purchaser views the value and purchase price for property can be impacted significantly by this new ruling. Although the prior landlord may still have a claim against the tenant for money damages for past due rent, the prior landlord will not have standing to commence an eviction action once it no longer owns the property.
For more information or to discuss strategies to mitigate the impact of his new wrinkle in Illinois law, please contact Christopher Cali at .

LIBOR Replacement
The London Interbank Offered Rate (“LIBOR”) is an index reflecting interest rates at which banks borrow money from each other.  LIBOR is used as the base interest rate in many bank loan and other financial transactions.  LIBOR has been criticized because it is based on surveys of banks regarding only unsecured loans and it has been the subject of improper manipulation by European and United States banks.
 In July 2017, the chief executive of the United Kingdom Financial Conduct Authority (“FCA”), announced that LIBOR will be replaced by alternative rates within four years. United States authorities similarly have supported replacement of LIBOR.  Earlier this year the Federal Reserve Bank of New York, in cooperation with the United States Treasury Department, introduced the Secured Overnight Financing Rate as an interest rate benchmark.  The Federal Reserve set up an alternative rate committee in 2014 which settled on a broad survey of financial institutions based on repurchase agreements collateralized by United States Treasury securities.  The alternative rate committee has designated a plan to transition to that new overnight rate. Rate transition efforts are also being made in Europe.
Most loan documents referencing a LIBOR-based index already contain language similar to:
“If the [LIBOR] Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying Borrower.”
To prepare for the phase out of LIBOR and in response to inquiries by borrowers, banks have been attempting to develop alternative rate language to insert into new loan documents and to modify existing loan documents.  Those efforts have led to a variety of provisions, including, for example:
“If LIBOR is not capable of being determined and the circumstances are unlikely to be temporary, or LIBOR is discontinued, or there is a public statement by the relevant  [ authorities/governing body that LIBOR shall no longer be used, the new rate shall be selected by the Bank  [ in consultation with the borrower ] , and such new rate shall be selected and applied consistent with general market practice.”
Provisions such as these may pose a risk if the borrower is given too much input into selecting a new rate or “general market practice” becomes too difficult to determine.  Other proposed alternatives have included a return to a prime rate-based rate but may be too complex for a middle market loan transaction. 
The market is currently awaiting guidance from the Federal Reserve and other authorities in order to determine language which will identify an alternative base rate to LIBOR.  The phase out could take more than two years.  We expect complacency to eventually give way to focus by financial institutions fashioning more uniform responses to the impending end of the use of LIBOR in loan transactions. 
For additional information on this topic, please contact Thomas Egan at .

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Chicago, IL 60603