New BPHX CFO: Bankruptcy, fraud or legit hire?
May 15, 2010
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On Thursday, Blue Phoenix announced that its CFO had resigned and had been replaced by a guy with a very thin resume. This happened less than two weeks before their quarterly earnings release, which is scheduled for May 26. My first thought was, "Holy crap! They're bringing in a sucker (or a cheater) to sign off on a fraudulently inflated earnings report!"
But it occurred to me that the move could also signal a looming bankruptcy, or they could just be taking a chance on a smart, motivated young guy.
How can I find out which it is? What other clues might I see if they were about to release an inflated earnings report? What clues would I see if they were on the verge of bankruptcy?
Some background: Nir Peles, the new CFO, was a "business development manager" (i.e. a salesman who recruits investors) at a small private investment company. (They take up one floor of an office building, so I'm guessing 20-50 employees). Before that, he was a consultant at BDO consulting, which recently became the world leader in number of active bankruptcy cases (but also "specializes" in corporate restructuring and fraud prevention, among many other "specialties").
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