Usually, a letter of credit is a kind of bank credit. As long as the documents submitted are correct, the paying bank must pay and be the first payer. It's none of your business if the buyer has money or not. The bank should pay you first, and then unilaterally coordinate with the buyer to deal with the matter that the buyer has no money to repay the bank.

According to your inquiry, it seems that the paying bank refused to pay you. In other words, the letter of credit, which is considered as the safest payment method, is not insured. Maybe this is a bank with average credit. Can you send me your name? You can use it as a reference. It also reminds the seller to check the credit status of the issuing bank when accepting the foreign letter of credit.

In addition, this matter should really be discussed with the bank. Is it possible to go through legal procedures in this case?