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ZIFFPAGE TITLEStirring the Pot

By Kim S. Nash Print this article Print

New systems obscured key financial data, forcing managers to make decisions on half-cooked information. After filing for bankruptcy, the company is working to recover.

Stirring the Pot

West and Lausas also worked to stabilize the systems. For example, they added memory to the Dell and IBM servers and set up a storage-area network to back up all production data for fast recovery in case of a crash.

Because the existing technology staff lacked deep knowledge of J.D. Edwards software, West decided to outsource maintenance and development of the system to Corio, a consulting division of IBM. New World pays Corio less than $5 million per year for the services, which is within the previous budget, he says.

Chapter 11 staves off vendors, banks and others who are owed money by a company, Donahue notes. Debts are often wiped clean or reduced to pennies on the dollar. Companies reorganize operations and, if necessary, financial controls to remake themselves into stronger, usually leaner businesses, she says. That's her goal for New World.

The plan, pending approval by a bankruptcy judge, projects that sales will increase by more than 3% per year through 2009, based primarily on growth of the Healthy Harvest whole-wheat pasta brand. New World hopes to embrace the low-carb diet movement with this new line.

Gross profits are expected to grow at least 6% per year. But the company won't predict future net profits because income taxes and interest on its loans aren't yet determined.

Still, the company acknowledges the SEC is investigating it, although it declines to reveal the focus of the probe and the agency declines comment.

Finding leaders for a company that's suffered such financial and technology turbulence may be difficult. Donahue and West have begun the search for their permanent replacements. Donahue says she's talked to two people so far and the goal is to have a new CEO on board by Oct. 29, when the company is expected to emerge from Chapter 11.

As for the technology leader, West is looking for a certain kind of individual—someone who doesn't measure his value by the number of people he manages. New World's technology staff stands at five, with another three positions open. "In a bankrupt company using some outsourcing, you're [looking for] a person who wants to drive business change and manage a relationship with an outsourcer to get [that change] executed," he says.

West also wants someone with experience in the food business and, perhaps most important, someone who has managed enterprise manufacturing and financial software. So far, he's still looking.

This article was originally published on 2005-08-04
Senior Writer
Kim has covered the business of technology for 14 years, doing investigative work and writing about legal issues in the industry, including Microsoft Corp.'s antitrust trial. She has won numerous awards and has a B.S. degree in journalism from Boston University.
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