Eikaiwa

Japan’s troubled language school Nova says it will apply to the courts for bankruptcy protection, after it announced that a boardroom coup had ousted its elusive president.

Nova is one of Japan’s largest language schools, employing more than 4,000 foreign teachers, many of them Australians.

Nova will seek court protection from its creditors over more than $400 million in debt, which is a step to avoid bankruptcy.

The company has failed to pay its foreign staff this month, and has not paid its Japanese employees since July.

http://abc.net.au/news/stories/2007/10/26/2071245.htm?section=world

Missing president dismissed in absentia

Nova Corp., Japan’s largest language school chain, filed for bankruptcy Friday with estimated debts of about ?43.9 billion as it failed to recover from a crippling penalty for false advertising.

Osaka-based Nova said it applied for protection from creditors under the Corporate Rehabilitation Law with the Osaka District Court, and pledged to find a sponsor for rehabilitation under the supervision of a court-appointed administrator. The court accepted the application.

The Jasdaq Securities Exchange said Nova’s stock has been suspended from trading and will be delisted on Nov. 27.

The company, offering mainly English conversation classes to an estimated 420,000 students nationwide, said it has shut down all its schools, and Nova President Nozomu Sahashi, who has a 16 percent stake in the company, is nowhere to be found.

The company said Sahashi was dismissed as president during an emergency board meeting held without his presence late Thursday night because he failed to adequately explain his “opaque way of fundraising and negotiating with potential business alliance partners.”

The board then appointed Shoichi Watanabe, Hitomi Yoshizato and Anders Lundqvist as new directors with the right to jointly represent the company. Sahashi and Lundqvist founded Nova in 1981.

The decision to file for bankruptcy was also made at the meeting, the company said.

Nova’s decision to seek court protection came just as Nova employees and the Osaka Central Labor Standards Supervision Office were turning up the heat over workers’ unpaid salaries.

The company has failed to pay about 2,000 Japanese employees since July and about 4,000 non-Japanese instructors since September, according to a union representing non-Japanese teachers employed by Nova.

Nova was already coming off of two consecutive years of net losses when its final spiral began earlier this year. Customers complained that the chain was running misleading ads about its services. Nova was also facing numerous lawsuits from students who wanted fuller refunds from canceled lesson contracts.

The crippling blow came in June, when the Ministry of Economy, Trade and Industry ordered Nova to partially suspend business because of false advertising. The penalty, which included a ban on long-term lesson contracts, caused student enrollment to plummet and sparked the closure of several schools. Paychecks began coming in late.

Nova was founded in 1981 and took off on a rapid expansion in the 1990s. It grew by offering cheaper lesson fees than rivals and launching aggressive marketing campaigns that spread to TV in the 1990s. After enrollment rose from 320,000 in business 2001 to 480,000 in 2005, it commanded as much as 47.0 percent of the English-language school market.

http://search.japantimes.co.jp/cgi-bin/nn20071026z1.html

[Nova] had been reeling from an administrative punishment issued in June over illegal practices, including deceiving would-be students with misleading advertisements.

One focus of attention will be whether Nova’s estimated 300,000 students will be able to receive refunds for the lesson fees they paid in advance.

The prepaid fees account for about 20 billion yen of the company’s liabilities.

Another question concerns the wages in arrears to many of about 4,000 instructors and 2,000 other employees.

http://www.asahi.com/english/Herald-asahi/TKY200710260289.html

NOVA Corp., Japan’s largest English conversation school chain, took a further dive Friday morning, after filing for court protection from creditors under the Corporate Rehabilitation Law.

The Osaka District Court is expected to appoint a receiver to try and rehabilitate the scandal-tainted firm, which currently has liabilities totaling 43.9 billion yen.

Prior to the filing, NOVA dismissed its president, Nozomu Sahashi, at an extraordinary board meeting in Tokyo late Thursday night, which he refused to attend.

Sahashi opened NOVA in the Shinsaibashi district of southern Osaka in 1981, and the chain grew rapidly through its aggressive TV marketing campaign. With about 900 schools and some 418,000 students as of late March this year, NOVA became the largest language school operator in the country.

However, it failed to employ enough instructors to teach its rapidly growing student base, and as a result, many complained that they often couldn’t book any lessons.

Furthermore, the Supreme Court ruled in April that NOVA was breaking the law when it refused to refund tuition fees to students who cancelled their contracts. In June, the Economy, Trade and Industry Ministry banned NOVA from some of its business activities after concluding that 18 reported cases of refusing to refund tuition fees and other business practices were illegal.

After losing a significant number of students over the scandal and with its financial situation rapidly degenerating, NOVA desperately attempted to find new investors while closing and integrating more than 100 of its schools. The company has also suspended wages for many of its instructors and staff, apparently leaving some instructors facing eviction from their NOVA-run housing.

http://mdn.mainichi.jp/national/news/20071026p2a00m0na002000c.html

An Osaka labor standards watchdog wants to question the president of scandal-hit English-language school chain Nova Corp. over delayed wage payments, but meanwhile four executives of the firm have resigned because they can’t get ahold of their boss, Nova said Wednesday.

The Osaka Central Labor Standards Supervision Office has quizzed foreign teachers and other Nova employees about the delays, and wants to hear from President Nozomu Sahashi, suspecting a violation of the Labor Standards Law.

A union representing Nova’s foreign teachers said the firm has failed to pay wages to some 2,000 Japanese employees since July and to about 4,000 foreign teachers since September, and wages that were supposed to have been paid on Oct. 15 are on indefinite hold.

Meanwhile, three Nova auditors and the chain’s longest-serving director have submitted their resignations.

Meanwhile, three Nova auditors and the chain’s longest-serving director have submitted their resignations.

The four are believed to have resigned because they were unable to get in touch with Sahashi. Their departure could have a serious impact on management and Nova’s ability to disclose financial statements.

Nova shut down several schools after student enrollment declined sharply after the Ministry of Economy, Trade and Industry issued a partial business suspension order in June. The order was given to punish the school for running false advertisements about its services and refund policy.

http://search.japantimes.co.jp/cgi-bin/nn20071025a2.html

Four high-ranking employees of scandal-plagued NOVA Co. resigned Thursday, including an executive who had been with the English conversation school chain since its inception, company officials said.

Anders Lundqvist, who had been involved with NOVA since its foundation walked out on the beleaguered business Thursday, together with three auditors.

Reasons for the resignations were not announced, but it is believed that Lundqvist and the auditors were at odds with NOVA President Nozomu Sahashi’s plans to rebuild the struggling chain, which has been plagued in recent weeks by such events as labor troubles brought on by not paying teachers and forced closure of schools because it couldn’t pay rents.

NOVA plans to hold an emergency board meeting on Friday to discuss how it can move ahead.

http://mdn.mainichi.jp/national/news/20071025p2a00m0na020000c.html

OSAKA — Osaka Labor Standards Office could as early as Tuesday hear from Nova Co. teachers and staff to decide whether to press charges against the English conversation school giant that continues to be beset by problems, office officials said.

The office asked members of [Tokyo Nambu’s sister union] the General Union, which includes many Nova instructors, for help with the case on Monday.

Last week, the union urged the labor standards office to file a criminal complaint against Nova for breaking the Labor Standards Law.

As of Tuesday, Nova has not paid Japanese staff members due to receive remuneration on Sept. 27 or instructors who were supposed to get their wages on Oct. 15. General Union representatives said Nova President Nozomu Sahashi faxed a letter to employees saying that they would be paid on Thursday.

Also Monday, the General Union gave a briefing to Nova teachers, staff and students in Osaka about the troubles facing Nova, including its late payments, a spate of school closures and bitter contractual spats surrounding students who want to cancel contracts with the company.

About 90 people attended two briefing sessions for staff and teachers. Some 200 students turned up for a briefing in the afternoon. At the meeting, there was a proposal that students create an organization to deal with Nova on a collective basis.

http://mdn.mainichi.jp/national/news/20071023p2a00m0na003000c.html

Nova used to pay teachers their salaries on the 15th of each month. As of last Friday, however, many teachers had not been paid. Some teachers say they are still owed for September, too.

That led some teachers at Nova schools in Osaka and Tokyo to go on strike. Several of those schools decided to close their doors temporarily last week.

At the end of March, Nova had more than 3 billion yen in cash and deposits.

However, it has continued to bleed cash since then, doling out millions of yen in salaries, refunds and office rental payments.

“Nova is in a precarious day-to-day financial situation,” said one source at a banking institution. If its circumstances don’t improve quickly, Nova may end up suspending all operations completely.

http://www.asahi.com/english/Herald-asahi/TKY200710220056.html