RSB Manufacturing Corp. v. Bank of Baroda (In re RSB Manufacturing Corp.)

JOHN J. GALGAY, Bankruptcy Judge.

Although letters of credit have become a staple in international trade, their widespread use has not carried with it a corresponding widespread understanding of the possible ramifications of their use. The present controversy between RSB Manufacturing Corporation (RSB), the debtor in these proceedings, and the Bank of Baroda (Baroda) and Chemical Bank (Chemical) arises out of a misconception by the debtor of the extent of the liability which an advising and paying bank assumes under an irrevocable letter of credit when there has been no confirmation of the…