Major English conversation school operator Geos Corp. said Wednesday it has started bankruptcy procedures at the Tokyo District Court, which ordered its assets protected from creditors.
The Tokyo-based school’s total liabilities are said to be 7.5 billion yen.
The school operator said it would hand over about 230 of its 330 schools nationwide to Nagoya-based G.communication Co. and shutter the remaining 100.
The transfer would allow 29,000 of Geos’ 36,800 students to continue studying at their current schools, Geos said. Additionally, about 7,800 students at the locations slated for closure could keep studying if they agree to transfer to nearby Geos schools.
However, the school operator said it would be difficult to refund tuition that already has been paid.
Geos also had focused its business on assisting students wanting to study abroad and arranging homestays with families in other countries.
Geos ran many TV advertisements, using its name recognition to pursue an expansionary policy, including establishing an affiliated company in Australia.
However, the school operator has lost students recently due to intensifying competition in the English conversation school industry and the sluggish economy.
Geos encountered financial difficulties after plunging into the red in the business year ending in December 2008 due to plummeting sales and losses incurred by the closure of some deficit-making schools.
G.communication also took over the operations of collapsed major English conversation school operator Nova Corp. in 2007.
GEOS
Future for Geos students at closing schools uncertain, no tuition refunds
Students of bankrupt English-conversation school operator Geos Corp. are frustrated with 99 out of 329 schools nationwide closing and no refunds for those who have already paid this year’s tuition.
Some 230 Geos schools will continue operation under the management of G.Communication, while the other 99 will be closed. Geos and G.Communication made a joint statement on Wednesday that they would “work for the best interests of the students,” but students who won’t be able to continue classes at their schools are concerned.
A 22-year-old female student at a closing Geos school in Sangenjaya in Setagaya Ward, Tokyo, says she just paid her entire yearly tuition last month. She had previously paid her tuition on a monthly basis. However, around autumn of last year, the school started repeatedly recommending she pay her yearly tuition in a lump sum.
The student’s mother is a former student at English conversation school chain NOVA, which also went bankrupt. She warned her daughter that it was suspicious that the school was trying to get her to pay so much money up front. The student says she hesitated to pay until the last minute.
“If they recommended the lump payment while knowing they would be going bankrupt, it’s depressing,” she said sadly.
Since no refunds will be offered, the student is considering continuing at the nearest school that G.Communication will take over, but said, “It’s far from my home, and I’m worried that a new teacher wouldn’t teach in the same way as the old one.”
Elsewhere, at a school in Nara that is scheduled to close, a 23-year-old American teacher who had come to find out the latest news complained angrily, “At yesterday’s meeting, the school manager told us that Geos’s financial condition was fine, but this morning we got an e-mail about the bankruptcy. We were lied to. If I don’t get paid, I can’t afford a flight back home.”
Geos and G.Communication have set up a toll-free line to address students’ concerns at 0120-1344-46. The line is open from 10 a.m. to 8 p.m.
http://mdn.mainichi.jp/mdnnews/news/20100422p2a00m0na017000c.html
Bankruptcy of Geos blamed on shrinking market for English conversation schools
The bankruptcy of major English school operator Geos Corp. is largely attributable to the shrinking market for English conversation schools in Japan, as a result of the declining birth rate and the economic downturn.
“The entire industry has been in a slump, and we lost a large number of students because of the recession,” Kazumi Suhara, a board member of Geos told a news conference on Wednesday as she explained the cause of the bankruptcy.
The market began to expand rapidly about 30 years ago, and a large number of English conversation schools were opened in urban areas.
Geos rapidly expanded its network of English conversation schools by aggressively airing TV commercials.
However, the competition between English schools has been intense in recent years as the number of students declined due to the recession following the bursting of the speculation-driven, asset-inflating bubble economy and a decline in the population of students and schoolchildren.
NOVA, another major English school operator, went under in October 2007.
In the same month, the maximum amount of government subsidies for those who take lessons at English schools, which contributed to the English-learning boom, was lowered from 200,000 yen a year to 100,000 yen.
As a result, the number of students at English conversation schools nationwide decreased from approximately 750,000 in February 2007 to about 360,000 a year later.
The collapse of U.S. financial giant Lehman Brothers in the autumn of 2008 dealt a further blow to the industry.
“Households have lost the leeway to pay for language classes and other lessons,” says an executive with a major bank.
The number of students at Geos, which stood at some 40,000 as of the end of September 2008, had fallen to about 36,800 by the time it collapsed, according to Teikoku Data Bank.
The company fell into a vicious circle of deep cuts in advertising expenses causing the number of those who sign up for lessons at Geos to decline, according to Suhara.
Its study abroad program also contributed to its bankruptcy. A subsidiary in Australia had its visa revoked in December last year because of a shortage of funds, and was forced to close all its eight schools in the country.
“It worsened the already severe financial situation,” says lawyer Nobuaki Kobayashi, who serves as bankruptcy receiver for Geos.
G.Communication Group, which is set to take control of Geos’ schools, has been successful in reviving NOVA, which it also took over, by streamlining its operations. Specifically, it relocated its NOVA schools to the premises of cram schools it operates and took other cost-cutting measures.
Nevertheless, few are optimistic about the future of English schools as they face growing competition from online schools, such as one that allows students to take online lessons from Filipino teachers — whose wages are comparatively low — and costs only 8,000 yen a month.
It remains to be seen if G.Communication will be able to put Geos and NOVA on a path to stable growth.
http://mdn.mainichi.jp/perspectives/news/20100422p2a00m0na001000c.html
Geos Files For Bankruptcy
Geos Corp. said Wednesday it has filed for bankruptcy protection with the Tokyo District Court, saddled with debts of about 7.5 billion yen.
The operator of English conversation schools will hand over 230 schools in Japan to subsidiary G.communication Co. The rest will be closed.
G.communication, which took over schools from Nova Corp. in 2007 when the latter went under, manages about 470 English conversation schools.
Major English school operator Geos goes bankrupt
Major English school operator Geos Corp. filed for bankruptcy on Wednesday at the Tokyo District Court with liabilities of about 7.5 billion yen, company officials said.
Tokyo-based Geos operated 329 schools that had approximately 36,800 students. Nagoya-based G.Communication Group is set to take over 230 of the schools with some 29,000 students, while 99 other schools will be closed down.
All Geos schools will be closed on Wednesday and Thursday, and schools taken over by G.Communications will be reopened from Friday.
Geos officials said students who have already paid tuition fees will be able to continue to learn at nearby Geos schools without paying any extra charges.
Students who live in areas where there is no Geos school can attend lessons at NOVA schools, also operated by G.Communications, if they pay extra charges. However, they cannot get back tuition they have already paid.
Geos was founded in 1986. It operated English conversation schools across the country while offering overseas study and homestay programs.
However, its subsidiary in Australia closed all its schools in February after getting into financial trouble. The number of students had since decreased sharply because of a loss of confidence and intensifying competition in the industry.
http://mdn.mainichi.jp/mdnnews/news/20100421p2a00m0na023000c.html
Chinese students cautioned after GEOS English schools in Australia collapse
China’s Education Ministry on Sunday warned students considering studying overseas against Australian schools run by the GEOS group after more than 40 Chinese students were left stranded with the group’s collapse.
More than 2,300 students in GEOS group schools across Australia were affected after the college closures. The schools were scattered across Sydney, Melbourne, Brisbane, Perth and Cairns.
GEOS is a Japanese company which owns hundreds of colleges around the world. The GEOS group has run out of money for its Australian colleges,according to Australian media reports.
Chinese embassies and consulates in Australia are negotiating with local authorities to settle the issue to safeguard students’ legitimate rights.
The Education Ministry has drawn up a recommendation list of nearly 15,000 schools in 33 countries worldwide on its website. The recommended schools are relatively trustworthy and reliable.
Australia has been a preferred destination for overseas education for Indian and Chinese students.
The Australian Bureau of Statistics said the number of Chinese student enrollments was 146,000 by June 2009, up an average annual 16 percent over the past six years.
http://news.xinhuanet.com/english2010/china/2010-02/22/c_13182360.htm
College collapse angers overseas students
Department of Further Education, Employment, Science and Technology deputy chief executive Elaine Bensted said the State Government’s priority was the students and ensuring they could continue their study in Adelaide.
Meanwhile, a former director of GEOS Adelaide said the company acted as cash cow for the Japanese parent company.
Gary Maserow, who resigned in October, said he had “no idea” why GEOS Adelaide and eight other Australian GEOS companies went into voluntary administration.
Six of the nine companies recorded profits in the last financial year, according to financial reports completed by BDO Kendalls.
Mr Maserow, who was also regional co-ordinator for all GEOS colleges in Australia and New Zealand, said there was “enormous pressure” placed on the company to send Australian profits to Japan.
“Japan demanded and demanded,” Mr Maserow said.
Dharmadasa Ratnayake Mudiyanselage, a director of the nine Australian companies, said the companies had liquidity problems.
Mr Maserow said he had “no idea” why all of the companies went into voluntary administration.
“What happened in the last six months?” Mr Maserow said. “Because the audit was fine.”
Mr Maserow dismissed suggestions the global financial crisis had contributed to the collapse.
The Australian GEOS companies had two other directors at the time of the collapse: David Emert and Japan-based Tsuneo Kusunoki, who founded GEOS in 1973.
Mr Emert and Mr Kusunoki did not respond to calls.
Administrators Ernst & Young are continuing to investigate the collapse.
Uncertainty over language schools’ fate
The fate of up to 400 language students hangs in the balance with reports that their schools’ parent company has closed its Australian schools.
This week, eight Australian schools owned by GEOS in Japan closed but the fate of the company’s schools in Auckland, Wellington, and Christchurch remained uncertain, GEOS Auckland manager Stuart Binnie said.
The New Zealand schools are owned by GEOS in Japan but registered here. Between 300 and 400 students from up to 25 countries are enrolled in the three schools, which employ 20 to 30 staff.
If the schools closed, the students’ fees would be refunded or they would be placed in another English language school, he said. “I would guess there would be a lack of confidence in the brand name.”
An industry insider said the New Zealand GEOS schools would probably lose students rapidly “now that the reputation of GEOS among the international agents who supply the New Zealand schools with students has been compromised”.
The possible New Zealand closures follow the recent deregistration by the Qualifications Authority of two private Auckland training centres for non-compliance.
Authority records show the agency has long-running concerns with GEOS New Zealand’s financial management, although it was noted in the last audit at the end of 2008 that the company had made progress addressing the concerns.
According to the company’s annual financial statement, the New Zealand branch of GEOS lost almost $900,000 in 2008 after making a profit of nearly $1.2 million in 2007.
English New Zealand chairman Rob McKay said that, even if the New Zealand schools did not close, their reputation would be damaged. GEOS was one of New Zealand’s biggest private schools teaching English to foreign students.
Ad FeedbackGEOS’ head office in Tokyo said its schools outside Australia would operate as usual, but admitted the closures might affect its reputation and student numbers.
http://www.stuff.co.nz/dominion-post/national/3286808/Uncertainty-over-language-schools-fate
English language schools under threat of closure
The Victorian Registration and Qualifications Authority (VRQA) says it will protect the 2,300 students affected by the possible closure of a number of English language schools across Australia.
Nine companies associated with GEOS, which operates the schools in Melbourne, Sydney, Adelaide, Perth, and Brisbane, went into voluntary administration late last week.
The authority discovered that directors of GEOS have been diverting revenue from its Melbourne business, to support the operations of its other companies both in Australia and overseas.
A decision is expected to be made today on the schools’ future and Lynn Glover, the director of the VRQA, says the students and 400 staff will be looked after.
“If a decision is made by the administrators for the college to close, all overseas students will be protected by the tuition insurance scheme,” she said.
“This will mean that students will be placed in suitable alternative courses, here in Melbourne, at no additional cost and the VRQA will be supporting that process.”
Eight English schools won’t reopen: E&Y
The voluntary administrators of eight English language schools say that the schools will not reopen because of the financial situation.
Justin Walsh and Adam Nikitins of Ernst & Young say they are working with the federal department of education and state government departments to find arrangements for the 2300 international students.
The administrators were continuing to investigate the nine companies operating under the GEOS name and hope to provide a further update on Wednesday, Ernst & Young said in a statement on Monday.
“We’ve very quickly worked through the options to keep the schools open, but were unable to do so,” Mr Walsh said.
“That included speaking with the Japanese parent.”
GEOS, which had schools in Melbourne, Adelaide, Sydney, Cairns, Gold Coast, Perth and Brisbane, is the local subsidiary of the Tokyo-based language teaching company of the same name.
“Funds weren’t forthcoming” from GEOS, Mr Walsh said.
GEOS’s media relations manager was not immediately available for comment.
The students, from 20 different countries including Brazil, Colombia, South Korea and Turkey, and 390 employees were being informed at meetings on Monday afternoon.
“We’re working with federal government to minimise the impact on the students,” Mr Walsh said.