Linda Wachner: From Rag Riches to Rags

With her company's June 11 bankruptcy filing, Warnaco Group (WAC) Chief Linda Wachner gets a break from servicing $3.1 billion in debt and other liabilities. But many wonder if Wachner herself can survive at the helm. The famously blunt apparel exec, whose company markets such brands as Calvin Klein, Speedo, and Warner's, has overseen a collapse of the company's shares from $44 in July, 1998, to just 39 cents now. Even though Wachner holds a 22% stake in Warnaco, her bankers currently have financial control and may not favor someone who led such a devastating decline. One obstacle to ousting Wachner is a severance package that could cost the company more than $15 million to let her go. Turnaround specialist Tony Alvarez, who is Warnaco's new chief restructuring officer, dismisses speculation and notes that Wachner is leading the charge. But Peter Chapman of Bankruptcy Creditors' Service predicts "a 90% probability that there will be a new CEO." At the very least, Warnaco no longer looks like a one-woman show.

By Diane Brady