SYRACUSE, N.Y. -- Penn Traffic Co. here has a viable future, according to James A. Demme, the chain's newly designated chairman.
"I wouldn't be going there if I didn't think that," he told SN last week.
Demme, who has overseen successful turnarounds at Bruno's, Birmingham, Ala., and Homeland Stores, Oklahoma City, will join Penn Traffic Co. this week, pending formal approval by the U.S. Bankruptcy Court at a hearing scheduled for tomorrow. Demme told SN his appointment has already been approved by the chain's directors, banks and other creditors.
The court is also expected to hear a motion to grant the company approval to pay severance benefits to 100 employees whose administrative and supervisory positions were eliminated last week.
Penn Traffic has been operating under Chapter 11 protection since May 30 -- its second filing in four years. The company operates 211 stores in upstate New York, Vermont, New Hampshire, Ohio, West Virginia and Pennsylvania.
Demme said he believes Penn Traffic has the core elements to reorganize and successfully exit from Chapter 11, including "strong core operations, solid brand names, enviable market share in most of its markets, dedicated employees and a seasoned management team, and I am very confident we will be able to develop and implement a business plan enabling Penn Traffic to exit reorganization as a stronger, more competitive company."
He said he plans to spend five months as a full-time chairman overseeing strategic planning, operational improvements and business planning. After those five months -- which could be extended, he told SN -- Demme said he plans to assume a more traditional chairman's role and work with Penn Traffic on a part-time basis.
His immediate responsibilities will also include helping the board of directors identify and screen candidates for chief executive officer to succeed Joseph A. Fisher, who resigned for personal reasons as president and CEO last month. The company also needs to hire a new chief financial officer, following the resignation of Martin Fox early in May, prior to the Chapter 11 filing.
Gary Giblen, senior vice president and director of research for C L King Associates, New York, expressed faith in Demme's abilities but said he believes Demme's job will be to get the company in shape for a sale.
"Jim Demme is one of the most successful turnaround executives in the industry and a superb operator, and he's what Penn Traffic needs -- someone who can operate the company and not just engineer the finances."
As chairman, Demme will succeed Peter L. Zurkow, who will remain as a Penn Traffic director. Zurkow, managing director of the investment banking division of PaineWebber, New York, was named chairman in June 1999, when Penn Traffic emerged from a pre-negotiated Chapter 11.