Bankruptcy

Krispy Kreme’s Recipe for Recovery

Turnaround specialist Stephen F. Cooper, currently interim CEO, president, and chief restructuring officer of Enron Corp., has been named the compa...
Stephen TaubJanuary 19, 2005

Krispy Kreme Doughnuts Inc., which recently announced a restatement of its 2004 results and is being investigated by the Securities and Exchange Commission, has shaken up its management ranks.

The once high-flying donut chain announced that chairman, president, and chief executive officer Scott A. Livengood has retired. He will be replaced as chief executive by turnaround specialist Stephen F. Cooper, who is currently interim CEO, president, and chief restructuring officer of Enron Corp. Steven G. Panagos, now chief restructuring officer of The Penn Traffic Co., has been named president and chief operating officer.

Cooper is also the chairman and Panagos is a managing director of Kroll Zolfo Cooper LLC, which has helped a number of high-profile companies with their turnarounds, including Enron, The Penn Traffic Co., NRG Energy Inc., Federated Department Stores, Sunbeam, Laidlaw, Washington Group International, Polaroid Corp., Morrison Knudsen, and ICG Communications.

In addition, James H. Morgan, who has served as a director of the company since 2000 and vice chairman since last March, has been elected chairman of the board. A former chairman and chief executive officer of Wachovia Securities Inc., Morgan is also chairman of The Morgan Crossroads Funds. Robert L. Strickland, a Krispy Kreme director since 1998 and a retired chairman of Lowe’s Cos. Inc., has been elected vice chairman.

Livengood will become a consultant to Krispy Kreme on an interim basis.

When Cooper led the reorganization of Laidlaw, the largest passenger bus company in North America, he “rejected pressure from some creditors to sell assets that are today worth far more than their fire sale prices,” James D. Wareham, a lawyer with Paul, Hastings, Janofsky & Walker LLP who represented Laidlaw in its restructuring, told Bloomberg. “The company ended up almost identical upon its exit from bankruptcy, but with $1 billion less debt. Today it’s one of the great success stories on the New York Stock Exchange in the past year.”

Three years ago, added Bloomberg, Cooper and his company were chosen by Enron’s creditors to manage the company’s bankruptcy in exchange for fees of more than $14 million a year. He went on to complete the second-largest bankruptcy in U.S. history in November, noted the wire service, by liquidating the company’s assets to repay creditors who were owed more than $67 billion.