By  on February 1, 1994

NEW YORK -- A year ago today, The Leslie Fay Cos. was regarded as one of the giants of the apparel industry. Today, after a gut-wrenching year of scandal, red ink and bankruptcy, it is a company struggling to reestablish itself.

Why Leslie Fay's books were cooked, why bogus entries inflated its profit figures over a three-year period, remains a mystery. What is clear, however, is that the 47-year-old company has to do something to put the luster back on its reputation. What it hopes will be a significant factor in bringing that about is a three-year business plan now being completed under the direction of John J. Pomerantz, its embattled chairman and chief executive officer.

Pomerantz said he will formally present the plan to the company's board and its creditors at the end of February. It will serve as a foundation for Leslie Fay's reorganization plan required under Chapter 11. The firm has been operating under Chapter 11 since April, forced into the courts after its credit dried up following the accounting fakery that came to light on Feb. 1, 1993.

In a telephone interview, Pomerantz revealed some of the details of the revamping that he's been orchestrating, along with Michael Babcock, president and chief operating officer, and John Dubel, who joined the firm in April as chief financial officer.

It includes substantial downsizing, a realignment of marketing, merchandising and production duties among four executives and still another shift in the firm's storehouse of labels.

It was exactly a year ago today that the world of Leslie Fay was rocked by the announcement it had discovered false accounting entries that had significantly inflated its profits. Pomerantz and Babcock said they had no prior knowledge of the irregularities. Leslie Fay's audit committee, made up of outside directors, hired Arthur Andersen & Co. to conduct an investigation. Andersen, the company said, came to the same conclusion, absolving "top management" of any implication in the plot. The report has not been made public.

Donald F. Kenia, corporate controller, was suspended as soon as the scandal broke and Paul F. Polishan, who was chief financial officer, was suspended about a month later. Kenia was fired in March and Polishan was dismissed in September.

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