In Re Knight

ORDER DENYING MOTION FOR REHEARING

The Debtor, James Edward Knight, seeks rehearing of this Court’s November 10, 1993 Order Determining Certain Trust Interests to be Property of the Estate (“Order”). Creditor GIAC Leasing Corporation filed a response opposing the motion and the matter was argued before the Court on February 17, 1994.

Only one new issue is raised by the Motion for Rehearing, namely the Debtor’s argument that under the terms of the Dorothy E. Knight Trust, Dorothy Knight may amend the trust to exclude the Debtor as a beneficiary without the Debtor’s consent. Section 10 of the trust instrument provides that Dorothy may amend the trust “by and with the consent of the trustees in office.... ” In its prior ruling, the Court interpreted this provision to mean the consent of all other trustees including the Debtor. In the Motion for Rehearing, Debtor cites Section 13 of the trust which defines the term “trustees” as “a majority of the trustees, unless otherwise indicated.” Based upon this definition, the Debtor argues that the trust could be amended without his consent. He argues further that this difference is significant and renders the interest of the Debtor in the Dorothy Trust too remote and speculative to be deemed property of the estate.

This new factual allegation does not compel a different result. First, the definition of “trustees” in Section 13 does not clearly apply to the amendment provision in Section 10 which refers to “the consent of the trustees in office.” Use of the modifying phrase “in office” would appear to require the consent of both of the other trustees.

Second, even if the trust could theoretically be amended without the Debtor’s consent, the Court agrees with GIAC that the potential ability of Dorothy and her daughter to defeat the Debtor’s interest does not exclude this interest from property of the estate, but merely affects the value of this interest. This amendment possibility is not comparable to the power of appointment vested exclusively in Dorothy under the Charles Knight Part A Trust. The Court found that this power of appointment rendered Part A to be too speculative to have value since the Debt- or’s designation as a beneficiary was subject to the absolute discretion of his mother.

By contrast, the Court does not find that Dorothy Knight and her daughter have absolute discretion to amend this trust. Rather, any action by the co-trustees would be subject to the fiduciary obligations imposed on trustees in the exercise of their discretion. Indeed, any action taken by the Debtor’s mother and sister to exclude him as a beneficiary in order to defeat the interest of the trustee in bankruptcy would likely be subject to collateral attack.

In sum, even if the Court was wrong in its finding that unanimous consent was necessary to amend, this possible error would not alter the Court’s conclusion. For the reasons stated on the record at the October 20, 1993 hearing, as incorporated in and superseded by this Court’s Supplemental Memorandum Opinion dated February 22, 1994, Debtor’s interest, as of the petition date, in both the Dorothy E. Knight Trust and in Part B of the Charles E. Knight Trust are assets of the estate.

At the February 17,1994 hearing, Debtor’s counsel advised the Court of Debtor’s intention to pursue a previously unresolved argument in this case, namely, his claim that his beneficial interests in the trusts were assigned prior to the filing of his bankruptcy petition. The Court’s November 10, 1993 also left unresolved the value of the trust interests. Until these remaining issues are resolved, both the November 10, 1993 Order and this Order Denying Motion for Rehearing should be deemed interlocutory orders not requiring immediate appeal to protect Debtor’s appellate rights.

Therefore, it is—

*378ORDERED as follows:

1. Debtor’s Motion for Rehearing is denied.

2. Within thirty (30) days from the date of this Order, the Debtor and GIAC Leasing Corp. shall either submit a joint stipulation with respect to the value of the estate’s interest in these trusts, or alternatively, file a joint motion requesting a hearing to determine the value of these interests.

3. Within twenty (20) days from the date of this Order, the Debtor shall file a motion seeking a determination of the validity and enforceability of his alleged prepetition assignment of the trust interests together with any further legal or factual argument in support. GIAC shall file any supplemental response in opposition within fifteen (15) days of service of the Debtor’s motion.

4. Upon review of the pleadings described in paragraphs 2 and 3 of this Order, the Court will schedule a further hearing, if necessary, to resolve the remaining issues.

DONE AND ORDERED.