This program examines the effect on a letter of credit (LC) transaction of the U.S. or Canadian bankruptcy of the applicant (Applicant) for the LC. Questions explored include:
- May the beneficiary (Beneficiary) of the LC draw on the LC or is it stayed from drawing because of the bankruptcy proceeding?
- May the issuer (Issuer) of the LC pay a facially complying drawing on the LC or is it stayed from doing so because of the bankruptcy proceeding?
- If the Issuer pays the LC drawing, may the Beneficiary keep the LC proceeds?
- If the Issuer pays the LC drawing, is it entitled to be reimbursed
- If the Issuer has been reimbursed, is it entitled to keep the reimbursement?
- What happens if the Beneficiary fails to draw on the LC?