660 Canadians among 4,000 out of work as 900-school Nova Group chain goes bankrupt
An estimated 4,000 foreign teachers, including about 660 from Canada, are without jobs after Japan’s largest school chain, Nova Group, closed its 900 schools and declared bankruptcy yesterday.
Many teachers are owed $4,000 in salary for September and October, said Catherine Campbell, a Cape Breton native who has taught English at various schools during 13 years in Japan.
“For many people, their rent has not been paid either, if they live in Nova housing,” said Campbell, who now represents teachers in Japan’s National Union of General Workers.
“The company deducts rent from their salary.”
“I’ve heard at least a dozen reports of eviction notices, very short, only two days in some cases,” Campbell said in an interview. “In some cases, they’ve gone to live with friends. In other cases, they are staying in the apartment even with an eviction notice. They still have a visa, and can find work elsewhere. But that’s the big problem. There’s a shortage of other jobs out there.”
Star calls to Nova Group’s Yonge and Davisville office in Toronto, its only location in Canada, were greeted by an answering machine.
Teachers and foreign union leaders say the Nova Group nightmare highlights the worsening treatment of foreign workers in Japan, once known for easy money during the 1980s bubble economy.
Workers characterize Nova Group, founded in 1981 and which now has 400,000 students, as an empire with a fly-by-night mentality that grew too big too fast, grabbing almost half of Japan’s burgeoning ESL market.
Nova Group’s problems multiplied earlier this year when a Japanese court ruled that it cheated thousands of students out of refund money, and created false ads, featuring a rabbit, that indicated students could study any time they wanted.
Campbell said Japan’s Industry Ministry neglected to monitor Nova from the beginning, and then over-reacted by banning the company from signing long-term deals with students.
“After that, Nova just started bleeding customers,” said Campbell. “The reports of staff not being paid accelerated the problems with their reputation.”
Teachers said about 2,000 Japanese staff, such as office workers, have not been paid since July in some cases.
Students, meanwhile, are demanding refunds. One Japanese college student, who asked not to be named, told a news conference yesterday that she recently paid 600,000 yen ($5,050) for three years worth of lessons. She plans legal action to reclaim 400,000 yen in refunds.
That might not be easy.
Osaka District Court yesterday granted Nova Group court protection from creditors under the Corporate Rehabilitation Law. Local press reports said the firm has debts estimated at 43.9 billion yen, or about $370 million dollars. The Jasdaq Securities Exchange in Tokyo suspended trading in Nova stock, and plans to de-list it on Nov 27.
The chain offered classes in conversational English, French, German, Spanish, Italian and Chinese. It recruited teachers at university campuses in Canada, the U.S., the U.K., and Australia, which supplied nearly half its foreign staff.
News
Embassies in Japan help unpaid teachers caught in foreign language school debt crisis
The Australian and British Embassies in Japan have begun providing assistance to their citizens working for Nova, Japan’s largest chain of private foreign language schools, after it filed for court protection from creditors.
The two embassies have set up sections on their Web sites to provide some support for teachers who reportedly have not been paid since September. Both said there were limits to how much assistance they could provide, because it was a private employment issue in Japan.
The Australian Embassy said the country’s Qantas airline will offer reduced airfare rate for a limited time to Australian Nova employees who want to return home.
The embassy will also provide a list of English-speaking lawyers for those seeking legal help, it said.
The British Embassy said it could help British employees of Nova contact family and friends in Britain if they were left with no funds, the embassy’s Web site said.
Osaka-based Nova Corp. has debts estimated at 43.9 billion yen (US$385 million; ?269 million) and employs about 4,500 foreign instructors, according to Japanese media.
Nova Corp. filed the protection request with the Osaka District Court on Friday under Japan’s Corporate Rehabilitation Law, according to court officials.
Nova officials were not immediately available for comment Saturday.
Nova’s current plight began after consumers filed complaints claiming the company’s advertisements about its services were misleading. In June the Ministry of Economy, Trade and Industry ordered Nova to suspend part of its business operations.
The company ? which promised in its advertisements a “study abroad experience at your local train station” ? has been forced to shut down some of its schools due to a sharp decline in student enrollment.
http://www.iht.com/articles/ap/2007/10/27/asia/AS-GEN-Japan-Nova-Court-Protection.php
Nova students, teachers up in arms
Students and instructors voiced anger Friday over Nova Corp.’s decision the same day to temporarily close all of its schools across the country.
Students are concerned about what will happen to their lessons and the fees they paid up front, and employees have criticized deposed President Nozomu Sahashi, saying he was “not qualified to run a company.”
Osaka-based Nova, which also filed for bankruptcy protection under the Corporate Rehabilitation Law on Friday, had previously been forced to close a succession of schools due to such factors as a worsening of its financial position and delays in paying instructors’ wages since the Economy, Trade and Industry Ministry ordered the firm to partially suspend operations in June.
According to a Nova employee, the company’s Tokyo headquarters sent e-mails or called every school ordering them not to open just after 9 a.m., with staff being told to stand by at home.
Foreign instructors and students arriving for morning lessons at the sixth floor of a building in Shibuya Ward, Tokyo–Nova’s main school in the area–found the lights were off. The lights had still not been turned on at 10 a.m., the time of the day’s first lessons.
“I paid 600,000 yen in advance for three years of lessons, and I still have two years to go,” a 35-year-old male student at the school from Nakano Ward, Tokyo, said.
A 31-year-old female student at Nova’s main school in Ginza said: “Even though I booked a lesson for the afternoon, no one told me anything. The school’s staff kept saying things would be fine, but they haven’t given a thought to us students.”
Foreign instructors and Japanese staff, most of whom have kept working despite having not received salaries since the end of September, spoke of their disappointment at a situation they felt would arise.
“It’ll be hard for me to find another job teaching French if the school is shut down,” a 39-year-old female instructor at the Ginza school said. “Nova could make a bit more of an effort.”
“I thought it might be hard to keep the classes going, but what will happen to my salary?” a 21-year-old female employee at different school in Tokyo said. “I’m anxious about how I’m going to live.”
A Nova employee handed out documents detailing matters such as the announcement of Sahashi’s dismissal to the press, which had packed into Nova’s Tokyo headquarters, located on the 23rd floor of a skyscraper in Nishi-Shinjuku, just after 9 a.m. She insisted she did not know anything more.
“Sahashi never said how he planned to rebuild the company, and honestly speaking, he isn’t qualified to be president,” a male employee said. “We’ve not only lost a lot of students, but also many employees.”
===
Help lines for foreign teachers
The Health, Labor and Welfare Ministry opened consultation services for foreign instructors through the Tokyo and Osaka labor bureaus Friday to deal with the increased number of inquiries regarding matters such as unpaid salaries.
Hello Work job-placement offices in eight prefectures, including Tokyo and Osaka, had received 563 inquiries from foreign instructors as of Wednesday.
Consultations regarding nonpayment of wages and unemployment insurance, for which different departments are usually responsible, will both be available in the services. “Once we’ve got a clear picture of the situation [regarding the nonpayment of wages], we’ll take appropriate measures based on the law,” Health, Labor and Welfare Minister Yoichi Masuzoe said at a press conference following a Cabinet meeting Friday.
Inquiries should be made to the Tokyo Labor Bureau’s Shinjuku Employment Assistance and Instruction Center for Foreigners on (03) 3204-8609, or the Osaka Labor Bureau’s Osaka Employment Service Center for Foreigners on (06) 6344-1135.
Receivers want NOVA to be back offering classes soon
Failed English conversation school chain NOVA Corp. could be back in operation within a month with the support of companies willing to help it rebuild, its receivers said.
Court-appointed receivers for NOVA, Toshiaki Higashibata and Noriaki Takahashi, said they plan to start looking for backers for the failed chain, with current candidates including retail giants Marui Co. and Aeon Co. and the IT sectors’ Yahoo and Rakuten, with other companies also having put their names forward.
Whether NOVA can actually be rehabilitated remains another matter, as it is mired in debts of tens of billions of yen, including about 4 billion yen in unpaid wages to teachers and other staff.
Ousted NOVA president Nozomu Sahashi’s fate also remains unclear. “We’ll look at the case first before deciding what legal measures to take,” one of the receivers said.
NOVA collected over 40 billion yen from students as advance payments for English language conversation classes, more than it had gathered at the end of March. It owes some 4 billion yen in unpaid wages.
Receivers said they want to maintain NOVA’s nationwide network, and are willing to make it a condition that any company stepping in to help the chain allow students who paid the failed chain for lessons to be able to receive them.
NOVA’s roughly 4,900 employees have been told to wait and the chain’s schools have all been suspended from operating. The tens of billions of yen in debt that NOVA accumulated has made selection of a backer to save it essential, but if a rescue plan can’t be worked out, NOVA will have to file for bankruptcy.
NOVA’s student numbers have plummeted from about 418,000 at the end of March to around 300,000. During the same time, it has gone from 925 schools to 669. The 300,000-plus students, staff and teachers are all NOVA creditors and receivers’ negotiations with them are expected to be prickly.
http://mdn.mainichi.jp/national/news/20071027p2a00m0na007000c.html
Nova chain files for bankruptcy
A Hello Work public job placement center in the Kabukicho district of Tokyo’s Shinjuku Ward set up a window Friday to accept consultations from Nova employees, including foreign teachers.
Nine staff members and three interpreters took charge of the consultations.
More than 20 telephone calls came in the morning alone.
Four people also visited the window, asking such questions as: “How can I get the unpaid wages?” “What procedures should I take to obtain unemployment insurance benefits?” and “Can you find a new workplace for me?”
One of the four was a 24-year-old American who had worked at a Nova school in Tokyo’s Shinbashi for one year as a teacher. He has not been paid since September, and said he wants to live in Japan for three more years.
“What should I do now?” he asked.
http://www.asahi.com/english/Herald-asahi/TKY200710270106.html
Teachers face expulsion in schools shutdown
THOUSANDS of young foreigners teaching English in Japan were left jobless and in danger of expulsion from the country yesterday after the embattled language education giant Nova shut its 925 schools and sought bankruptcy protection from creditors pursuing 43.9 billion yen ($420 million).
At least 5000 foreigners, 2000 Japanese staff and 400,000 students at the private English-teaching chain have been left in a precarious financial position by the move, which could herald one of the biggest corporate collapses in Japan’s history.
Australian teachers, who make up one-fifth of Nova’s foreign staff, are regarded as the backbone of Japan’s billion-dollar English-teaching industry.
Along with their Japanese colleagues, they are owed wages for at least two months.
“I’m due more than $6000, and to be honest, I seriously doubt I’ll ever see a cent of that,” said 27-year-old Chris McCauley, from Melbourne, who taught at a Nova school outside Tokyo for two years. “I’m really pissed off. I have $270 in the bank and I don’t know what I’m going to do.
“I can’t afford a flight home, and getting a new English-teaching job is going to be virtually impossible while 5000 other ex-Nova teachers are competing. This is scary.”
Foreigners sponsored by Nova to work in Japan face the possibility of losing their visas, and consequently their right to stay in the country.
The Foreign Affairs Minister, Alexander Downer, earlier pledged government assistance to the “1300 Australians who are suddenly finding themselves in the street”. “If they get into real personal difficulties, we’ll obviously help them out”, he said.
As several teachers called family members for help yesterday, their students went to schools to vent their anger over Nova’s inept management.
Nova’s president, Nozomu Sahashi, who owns a 16 per cent equity stake in the Osaka company, did not turn up to an emergency board meeting on Thursday and was still nowhere to be found yesterday, Nova said.
The company dismissed him from the board for failing to explain his “opaque way of fund-raising and negotiating with potential business alliance partners”. The company is now jointly represented by three board members, including Anders Lundqvist, who co-founded it in 1981.
At Osaka’s District Court, Nova pledged to find a sponsor for its rehabilitation under the supervision of a court-appointed administrator. It has said it would need a significant cash injection within 10 days to survive. But most industry sources believe it is doomed. The Jasdaq Securities Exchange for start-ups and venture companies said it would delist Nova today.
At its peak the chain controlled half of Japan’s private English-teaching industry. It was plunged into financial crisis this year, partly due to overexpansion, but also because the Ministry of Economy, Trade and Industry banned the company from signing new students on long-term contracts for six months after it was found to have lied about its services and cancellation policy.
Its demise has been embarrassing for the Government, whose senior spokesman, Nobutaka Machimura, said yesterday: “This matter affects not only our students but all the foreign teachers and staff, so we very much hope the impact on them can be minimised.”
Nova founder Sahashi took dictatorial approach
Nozomu Sahashi, founder and former president of Nova Corp., was known as a dictatorial person who had to decide everything himself as he drastically expanded the firm’s business.
Even after the firm was ordered in June by the Economy, Trade and Industry Ministry to partially suspend its operations, Sahashi made efforts to raise funds for the firm’s operation. However, he was ousted from the post of president in a “coup d’etat” mounted by his business partners.
Sahashi, who studied in Paris after graduating from high school, was 29 when he founded Nova Corp. in 1981.
The firm became the nation’s largest English-conversation school chain operator in a short period due to its promotions that used easy-to-understand catch-phrases, such as “ekimae ryugaku” (study abroad near your train station), and the Nova rabbit mascot.
When the firm was established, other English-conversation schools were charging as much as 10,000 yen per lesson. But the firm offered lessons for only 1,800 yen and gained broad support from students.
While he was known as a person of ideas, he was extremely autocratic. Some employees of the firm found his business expansion policy excessive. However, Sahashi reportedly simply gave orders and would not listen to arguments.
After the firm began suffering financially, Sahashi single-handedly began looking for firms wishing to form business tie-ups with Nova and attempted to secure operating funds. However, he never disclosed the details of his negotiations to the firm’s executives.
Whenever the executives asked him to explain the details of his negotiations, he just asked that his efforts not be interrupted, saying he would soon be able to conclude a business tie-up.
Sahashi, whose whereabouts lately have been largely unknown, has recently sent orders to subordinates via e-mail and other means.
Teachers left jobless as Japan language school goes bankrupt
Nearly 1,000 British language instructors were left fearing for their jobs yesterday after Nova, the scandal-ridden owner of Japan’s biggest chain of language schools, closed its doors and filed for court protection from creditors with debts totaling an estimated 43.9bn yen (£1.88m).
The firm, which has about 900 schools and 418,000 students, built its success on the back of advertising campaigns promising opportunities for “international exchange” at schools near railway stations staffed by native-speaker instructors. But its troubles began earlier this year when Japan’s supreme court ruled that it had acted illegally by refusing to refund students who had cancelled their contracts.In June the trade and economy ministry ordered Nova to close some of its schools after ruling that it had misled students in advertising campaigns.
The negative publicity led to a dramatic decline in enrolments and left the school unable to pay thousands of its teachers, some of whom also face eviction because Nova failed to pay their rent, which is deducted from their salaries. Nova’s 2,000 Japanese staff have not been paid since July and about 4,000 foreign instructors have not been paid since September. Christopher Gunn, one of around 900 British Nova teachers caught up in the crisis, has had to borrow from friends to pay his 55,000 yen monthly rent and has only 3,000 yen left in his bank account.
“Until this morning no one knew what was happening,” he told NHK television. “I’m angry and a little upset but not surprised at all. I may have to borrow money for a plane ticket home.”
One British employee, who works as a trainer, told the Guardian she and her boyfriend, who will not be paid until next month in a new job, were living off the last of their savings and help from their parents. “Rent and bills are getting difficult to pay,” she said. Another British couple she knows are facing eviction, she added.
The Osaka district court will try to find sponsors to rebuild Nova’s business. Trading in Nova shares was suspended on the Jasdaq securities exchange in Tokyo, with the shares to be delisted next month.
The General Union, which represents many Nova employees, said the school’s troubles had reached crisis point. “This is a serious development that could force many students, instructors and employees to suffer losses,” the union’s chairman, Katsuji Yamahara, said.
The British embassy in Tokyo has set up an advice page on its website. It is putting British teachers in touch with a travel agency that has agreed to provide cheap flights to the UK. “We are doing everything we can in terms of consular support and advice but the one thing we can’t do is provide direct financial assistance,” a spokesman told the Guardian.
Nova president, Nozomi Sahashi, was fired at an emergency board meeting on Thursday for his “opaque way of fundraising and negotiating with potential business partners,” the company said.
http://education.guardian.co.uk/tefl/viewfromabroad/story/0,,2200354,00.html
Nova seeks court protection from creditors
Language school giant Nova Corp. filed for bankruptcy Friday with the Osaka District Court and said it would temporarily close all its schools nationwide.
The sudden move, which came just as labor authorities were about to question its executives, including its missing president, will leave about 300,000 students without lessons and 7,000 employees without jobs.
The nation’s biggest language school chain offered mainly English conversation classes to an estimated 420,000 students. It filed for protection from creditors under the Corporate Rehabilitation Law. It had about ¥43.9 billion in debt as of the end of July, including ¥4 billion in unpaid teacher salaries.
The court appointed two lawyers as administrators to freeze its assets and debt repayments so it can determine the company’s true financial situation.
The Jasdaq Securities Exchange said the same day that Nova stock would immediately be moved to a monitoring post and delisted on Nov. 27.
The court-appointed administrators will try to find a new sponsor to help the Osaka-based company rebuild. If they cannot find one within a month, they will dissolve the company, said Toshiaki Higashibata, one of the administrators, at a news conference in Osaka later in the day.
“If we do not take action, we will cause greater trouble for the people involved,” Nova said in a statement jointly signed by Representative Director Anders Lundqvist and two other executives.
“To avoid further confusion and drastically rebuild the company, we removed President Nozomu Sahashi from his post and filed with the court to start the rehabilitation process,” the statement said. “We profoundly apologize for the great trouble and concern we have caused through this procedure.”
Sahashi’s name did not appear on the statement and Nova said it did not know his whereabouts. Sahashi, one of Nova’s cofounders, has a 16 percent stake in the firm.
Nova said Sahashi was dismissed in absentia at an emergency board meeting late Thursday 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 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 also was made at the meeting, the company said.
The struggling chain of English schools took a turn for the worse in mid-June after the Ministry of Economy, Trade and Industry ordered it to partially suspend business for six months for lying about its services when soliciting new students. Sales then plunged because the order prevented the school from recruiting new students and prompted many others to quit.
The administrators have decided to indefinitely close all of Nova’s 900 or so schools until it can sort out the mess and come up with a plan of action.
“It is to avoid confusion for now, maintain the company’s assets and judge whether corporate reconstruction is possible,” the administrators said in a statement.
While the schools are closed, they will try to come up with a new sponsor, transfer Nova’s ownership and resume operations as soon as possible to save the teachers’ jobs and resume classes, they said, asking employees to stand by.
Higashibata said the administrators were already in contact with prospective buyers. The candidates being discussed within the company so far include retailers Aeon Co. and Marui Group Co. and Internet firms Rakuten Inc. and Yahoo Japan Corp.
Nova said it is unable to give lessons and all reservations have been canceled. And since it is not allowed to pay back debt during rehabilitation, lesson fees already paid ? as well as lesson tickets already purchased ? cannot be refunded yet.
METI reportedly has asked an industry group to find new schools for Nova students.
Students who want to contact Nova about their individual cases are asked to do so via fax at (06) 6649-9790 or by regular mail to: Midosuji Minami Building 4F, 2-3-2 Nishi-Shinsaibashi, Chuo Ward, Osaka Prefecture.
Meanwhile, the Health, Labor and Welfare Ministry said it has begun accepting calls from Nova teachers concerned about their salaries and job insurance at (03) 3204-8609 in Tokyo and (06) 6344-1135 in Osaka.
Administrators said the issue of salary payments will hinge on whether the administrators can find a sponsor to rebuild the company and when.
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 foreign teachers employed by Nova.
According to market research firm Yano Research Institute Ltd., the market for English-language schools in Japan in 2006 shrank 5.2 percent from the previous year to ¥345.9 billion.
Even before the business suspension, Yano said the market would shrink amid the ongoing population decline.
METI’s punishment on Nova’s discount system for long-term lesson contracts, which helped expand the market in the past, will inevitably cause the language-school business to slow down, the institute said in a report in July.
Nova was founded in 1981 as Nova Planning Ltd. According to METI, Nova told prospective students they could book language lessons any time they want and at any school nationwide. However, many clients complained that they were not able to reserve lessons during busy periods.
The METI probe also revealed that several Nova schools did not give full refunds to people who canceled lessons.
Western teachers in Japan face redundancy as Nova language schools close
Thousands of foreign teachers including 900 from Britain face redundancy, financial misery and eviction from their homes after the collapse of Nova, Japan?s largest chain of English language schools.
Diplomatic sources at the British and Australian embassies in Tokyo told The Times that they were expecting a ?significant exodus? of teachers, as unpaid staff struggle to find new jobs and buckle under Japan?s hefty cost of living.
More than 900 British teachers, a similar number from Australia and arbout 1,300 from the US – some of whom have families and have settled in Japan – have been plunged into legal limbo, their careers hanging by a thread.
For many Nova teachers, the lack of salary could leave them homeless within a few days because their rent is usually paid to landlords directly by Nova.
One British teacher, who rents his own apartment, said that he was expecting a sudden flood of colleagues to be sleeping on his floor as they struggled to find new jobs in a market with only limited opportunities.
The airline Qantas, in agreement with the Australian Government, has begun offering cut-rate, one-way tickets back to Sydney for Australians stranded by the Nova bankruptcy.
Many English-language teachers are preparing for what could be drawn-out and expensive legal battles. Teachers in remote, rural parts of Japan, often young university graduates living abroad for the first time, have found themselves stranded as their savings run out.
Today all 1,000 branches of Nova – Japan?s largest language school chain, with 50 per cent of the market – remained closed after the company filed for court protection from its creditors.
?I feel betrayed,? said Richard Naish, a 25-year old teacher from Bath, whose Nova branch is in remote Tochigi prefecture. ?The managers and teachers have all resigned around me and for the last few weeks I?ve had no boss at all.?
Mr Naish arrived for work yesterday to find a Japanese staff member in tears, removing her belongings and bolting the front door of the school – perhaps for good.
Nobody has yet been told whether Nova, and the jobs of its 5,000 employees, will survive into the new year. Nozomu Sahashi, the company?s founder, who was sacked by his board yesterday, has disappeared from public view. The company said that it was looking for other companies to mount a rescue bid.
Nearly 450,000 students expecting to be taught as usual were met with locked classroom doors this morning; about 2,500 teachers from Britain, Australia, Canada and the United States were told that lessons would be suspended indefinitely.
The ubiquitous chain, which is known as the ?McDonald?s of language schools? and is famous for recruiting aggressively at British university campuses, has not paid teachers for six weeks. Japanese support staff and administrators working for Nova have not received pay cheques since August.
Across Nova?s network of schools, hastily written pledges from Nova?s head office in Osaka have, on successive pay-days, offered false hope to the teachers that they would be paid the next day.
The company is crippled with debts of almost 50 billion yen (£210 million), and has been losing students as its image has crumbled.
?There has been a sense that Nova would go under for a few months, but we were just kidding ourselves for ages that it was too big to fail,? said Joe Berry, a teacher from Yorkshire who has worked for Nova for two years.
?But now we know this is it, and people are going to struggle. Some of these teachers have families, mortgages – it is such a shame it?s come to this.?
Nova?s problems stem from an ill-conceived expansion of its branch network across Japan, backed by a massive advertising campaign. The company was unable to find enough experienced teachers to staff its classrooms, and many students defected to rival schools after complaining about the poor quality of Nova?s language courses.
Nova?s plight deepened in June, when it received a six-month ban on enrolling new students after regulators ruled that Nova had lied in its advertisements. The company is also notorious for its treatment of teachers and Japanese staff and has been accused of violating labour laws.
http://www.timesonline.co.uk/tol/news/world/asia/article2745177.ece