WHERE THE APPLICANT GOES BANKRUPT

QUESTION:

Can the issuing bank take delivery of and sell the goods to a third party in the event the applicant goes bankrupt?

COMMENT FROM MR. OLD MAN:

Hi,

Theoretically, if the b/l is made out to the order of the issuing bank, the issuing bank is entitled to the ownership of the goods, and hence, can take delivery of and/or transfer the ownership of the goods to a third party by endorsement. However, in reality, it is the applicant that is the real and lawful owner of such goods. If the applicant has been declared bankruptcy by the court, the issuing bank as the creditor needs to act in accordance with the Bankruptcy Law, i.e., to submit applications for opening of bankruptcy procedures of the applicant which falls into the state of bankruptcy, to recover the payment made to the beneficiary. The first and foremost action is to request for the court’s decision on temporary emergency measure allowing the issuing bank to take delivery of the goods and preserve them as security. If the goods are subject to rapid deterioration, a permission to take delivery of and sell the goods is needed.

This is Mr. Old Man’s own view. Mr. Old Man is not a legal expert.

Best regards,
Mr. Old Man