Donnay Declares Bankruptcy

Donnay SA, once the world’s top maker of tennis rackets, was declared bankrupt Friday by a Belgian court after failing to reach a deal with creditors to restructure its massive debt.

The family-run company is likely to become a takeover target, and several potential acquirers who had been anticipating the bankruptcy are expected to come forward, sources said.

Donnay’s products became popular when Swedish tennis star Bjorn Borg advertised them a decade ago, but the company began to suffer heavy losses after Borg retired in 1981.

Although its business was declining, banks continued to lend Donnay money, asking very few guarantees, said Fabrice Jacquemart, a spokesman for the government of Wallonia in Belgium, which has a 27% stake in the company.

Donnay’s debts total about 1.4 billion francs (U.S. $35 million), Jacquemart said. Weeks of negotiations with banks and the Walloon government failed to result in an accord that would have prevented the bankruptcy.

Creditors refused to provide new funds for Donnay, which has subsidiaries in the United States, Hong Kong, Brazil and Switzerland. Its 1987 revenue stood at $29 million, down a third from 1986, and its losses totaled $2 million.

The Donnay family started a firm in 1910 with six workers who made wooden tool handles. It moved into tennis rackets in the 1930s.