A surety which is obligated to pay when its insured is required by court order to repay a bankruptcy estate in an avoidance action is not bound by a Court-approved settlement in which the insured and the bankruptcy estate settled by agreeing to allow the bankruptcy estate to proceed solely against the surety.

The surety is entitled to litigate the numerous defenses to liability that it asserts that it and its insured had. However, because the underlying avoidance dispute had been in existence for many years, the surety is not entitled to the full discovery it seeks, but instead will be required to rely in part on the discovery taken over the years in the underlying avoidance action.