Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, January 6, 1994                   TAG: 9401060123
SECTION: VIRGINIA                    PAGE: C-3   EDITION: METRO 
SOURCE: ADRIENNE PETTY STAFF WRITER
DATELINE:                                 LENGTH: Medium

CEMETERY TO FILE FOR CHAPTER 11

Eric Ferguson said he will file today for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

Ferguson stressed that the bankruptcy protection does not mean the cemetery is broke, but is merely a safeguard to ensure that it can provide service for years to come.

The cemetery has enough money - at least for the time being - to keep the grass cut and to provide vaults and other burial services to people who have paid in advance, he said.

"From a current operating standpoint, the company is operating perfectly," said Joe Bounds, a Roanoke lawyer who is representing Ferguson. "But we see a storm on the road if we continue to use current operating expenses to pay for [upkeep of the cemetery]."

Uncertainty over the cemetery's future erupted in the fall of 1991, when Franklin County Commissioner of Revenue Ben Pinckard turned up a $700,000 shortfall in trust accounts while reviewing sales contracts for more than 9,000 cemetery plots.

Under state law, previous owners of the cemetery should have set aside 10 percent of all revenue from plot sales to provide for maintenance of the grounds, and 40 percent of other sales revenue to ensure that the cemetery had enough money for vaults and grave markers bought in advance.

Franklin Memorial Park, on U.S. 220 between Boones Mill and Rocky Mount, is one of the county's largest perpetual-care cemeteries.

The cemetery now has about 1,200 plots that have not been used, 750 of which are reserved, so there is plenty of space available to fulfill its commitments, Ferguson said.

By filing for Chapter 11, Ferguson hopes to revive the cemetery from its financial problems and restore the public's trust.

Bounds said they will try to recover money from the financial institutions that accepted discounted notes from owners of the cemetery in the past.

Under Chapter 11, businesses can continue operations while they sort out their assets and liabilities.

Similar action was taken on behalf of a financially troubled cemetery in Rockbridge County owned by Rooney Enterprises, which also operated Franklin Memorial Park from November 1990 to May 1991.

In both cases, Rooney Enterprises failed to make deposits into the trust accounts that are required as a safeguard against cemeteries' defaulting on their obligations.

The bulk of the $700,000 shortfall was the responsibility of Miloslava Ferguson, no relation to Eric Ferguson, who started the cemetery with her husband in 1960. She also failed to maintain the trust funds.