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

DATE: THURSDAY, December 15, 1994                   TAG: 9412150035
SECTION: BUSINESS                    PAGE: B-10   EDITION: METRO 
SOURCE: KIMBERLY N. MARTIN STAFF WRITER
DATELINE:                                 LENGTH: Medium

BOOKSTORE ON ITS WAY TO RECOVERY

U.S. Bankruptcy Western District Judge Ross Krumm on Wednesday accepted Walters' plan for financial reorganization of Books Strings & Things Inc.

That means the Roanoke and Blacksburg book and music stores, which Walters founded in 1965, can remain open while he repays his debts over the next seven years.

Krumm's verdict was a relief to book-lover Walters, who said he feared his $1 million debt would force him out of business.

Books Strings & Things "is a deal of the heart," Walters said. "I started this 30 years ago because I believed in the product, and there was no way I was going to walk away."

And he didn't, but it isn't over yet, Krumm said.

"You've taken a big step, and you're to be congratulated, but it doesn't mean you're out of the woods yet," Krumm said to Walters after rendering his decision. "The failure rate of confirmed Chapter 11s is very high ... This is simply the beginning."

The journey so far has been all uphill.

Until recently, there was staunch opposition to financial reorganization from the retailer's largest secured creditor, NationsBank Corp. The Charlotte, N.C.-based bank is owed about $395,000.

Walters had to file monthly accounting reports to the court; unsecured creditors filed three lawsuits against him. Those cases still are pending.

As of 8:15 Wednesday morning, the plan was one signature short of passing, but, by 9:30 a.m., Polygram Music, which previously had abstained from voting, gave him the vote it needed.

"It's been a long, hard struggle to get this far," said Walters' lawyer, Tom Dickenson.

The approved plan for financial reorganization calls for Walters to pay 100 percent of the money he borrowed, plus interest, to NationsBank, the three stockholders who loaned the company money, an employee trust fund and back taxes.

As for his unsecured loans from music and book distributors, Walters will repay them 60 cents on the dollar. He isn't worried.

"I have enough business coming in to make the payments," he said.

He isn't bitter, either. He looks at his seven months of anguish as a learning experience.

"In the beginning, the reports were awful, but they've really helped me. I know exactly every check that comes in and every purchase we make. I'm watching everything. Before, I let things slide," Walters said. "But this is never going to happen again."

He predicts that in seven years his two stores will be healthy. But by then, Walters' future with Books Strings & Things may be uncertain.

"By the time the plan is done, I'll have been at this for 37 years. That's a long time, and I still have books to write," he said, laughing.