Once the darling of Wall Street, at the time of its 2000 IPO--which Livengood oversaw--Krispy Kreme had a bad 2004, with sales taking a beating in the wake of the low-carb craze, and then by being obliged to restate its 2004 financial reports due to errors in how it accounted for repurchases of franchises. To cap things off, for the eight weeks ended Dec. 26, average weekly sales per store decreased for the doughnut maker about 18% (25%, for company-owned stores), compared to the corresponding weeks of 2003.

KZC is a well-known corporate restructuring specialist. Most famously, Cooper currently acts as interim CEO, president and chief restructuring officer of Enron; before that, he was vice chairman of Laidlaw. Panagos is the national practice leader of KZC's Domestic Corporate Advisory and Restructuring Group and formerly was interim CEO at the Penn Traffic Co., where he's currently chief restructuring officer.

The company also reported that its lenders have agreed to defer until January 24 the date on which a default would occur because Krispy Kreme hadn't delivered corrected financial statements for the quarter ended October 31, 2004. The company anticipates that it will need more time than that, but with the restructuring of its management, it also says that its lenders will probably give it another extension.