Issues with the Letters of Credit (L.O.C.s)

The most common way to finance a motion picture is pre-sale which providing L.O.C.s for the bank financing to engage. I am interested in the concerns and and issues that bank, distributor, and producer have to deal with when working with L.O.C.s. I am sure someone has all the answers, would be very kind of you to take some time and explain me this a bit.