In Re Westgate-California Corporation, Debtors. Royal Bank of Canada, and v. Curvin J. Trone, Jr. And Herbert Kunzel, Trustees, And

Royal Bank of Canada (Royal Bank) appeals from a district court order confirming the joint reorganization plan of Westgate-California Corporation (Westgate) and its subsidiaries under Chapter X of the Bankruptcy Act, 11 U.S.C. § 501 et seq. The district court held that Royal Bank has no standing to challenge the confirmation order because it is not a creditor of the bankruptcy estate and even if it were a creditor its objections are without merit.

On May 17, 1971, West Coast Properties, Inc. (West Coast) issued the United States National Bank of San Diego (USNB) its promissory note for $1.2 million. USNB was controlled by C. Arnholt Smith, who also controlled West Coast’s parent, West-gate, a holding company. On the same day, USNB endorsed the note to Royal Bank and issued its irrevocable letter of credit to Royal Bank which advanced $1.2 million to USNB. The letter of credit authorized Royal Bank to draw on USNB for West Coast’s account up to $1.2 million. The letter contained a maturity date of May 17, 1974 and specified interest “at the rate of lVi% per annum over the Royal Bank of Canada’s six-month London Interbank Rate . . .. ” The promissory note neither stated an interest…