Japan’s largest chain of foreign language schools, Nova Corp, has filed for court protection from creditors.
The firm, which mainly offers English classes, has more than 800 schools and 400,000 students across Japan.
But in June, it was ordered to suspend part of its operations, after a court ruled it had misled customers in advertisements about some services.
Since then, student enrolment has fallen sharply and Nova has accumulated debts of up to JPY50bn ($437m, £213m).
Its 2,000 Japanese staff have not been paid since July and some 4,000 non-Japanese instructors have not been paid their salary for October, union officials said.
Nova has now closed all its schools, Kyodo news agency said.
A court-appointed trustee will sort out its debts and seek sponsors to rebuild its business, Japanese media reports said.
Nova is one of Japan’s major employers of foreign nationals. Murdered Briton Lindsay Anne Hawker was working for Nova at the time of her death.
Nova
Aussie teachers lose jobs in Japanese school shutdown
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
Nova files for bankruptcy with debt of ¥43.9 billion
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.
Nova language school chain goes under
[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.
http://www.asahi.com/english/Herald-asahi/TKY200710260289.html
NOVA scrabbles for court protection with 43.9 billion yen of debt
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
Nova management in further turmoil
Management turmoil at Osaka-based English-conversation school company Nova Corp. has led to the sudden closure of schools, complaints about tuition refund delays and other problems.
Of its about 900 schools nationwide, around 50 had closed as of the end of September. This month, at least another 50 schools will be unable to offer lessons due to the absence of teachers and are effectively closed.
Students at existing schools are having difficulty reserving lessons, while students who have canceled their lesson contracts are not sure when their tuitions will be refunded.
With its finances deteriorating, the company that once boasted 400,000 students nationwide is in turmoil.
On Monday, the General Union, which includes foreign Nova teachers as members, held an explanatory meeting in Osaka. About 200 students attended the event.
A 58-year-old female student of the Nova Sakai school in Sakai, Osaka Prefecture, which closed in mid-October, said: “I thought my school would be all right, but it closed abruptly. I didn’t know [the company’s] management was in such bad condition.”
According to a 52-year-old male student at the Tennoji main school, the school is open, but students can rarely take lessons due to the lack of foreign English teachers. The man bought points for lessons for 700,000 yen in advance and still has some remaining. “Students who can’t go anywhere else have been deserted,” he said angrily.
A 63-year-old woman who has studied at Nova for the last seven years, said: “Some teachers still teach us with enthusiasm. I hope the company will be able to keep them through changing the management.”
Delays in salary payments to employees and foreign teachers began in July, resulting in the loss of many teachers and making it impossible to regularly give lessons.
According to sources, about 50 schools in the Tokyo metropolitan area and the Kinki region had been closed as of the end of September.
In October, at least another 50 schools were unable to offer lessons due to the loss or absenteeism of teachers.
The situation has also affected public schools in Osaka.
The Osaka Municipal Board of Education decided on Tuesday to cancel a contract with Nova to dispatch assistant language teachers to 335 municipal primary, middle and high schools.
Labor body hopes to grill Nova chief on pay missteps
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.
Four NOVA executives quit, including founding board member
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
Cash-strapped NOVA fails to honor contracts to public schools after teacher exodus
OSAKA — Scandal-hit major English school operator NOVA failed to dispatch English teachers to local public schools after many teachers quit or took leave because they didn’t get paid, officials said.
By Monday, NOVA had cancelled its planned dispatch of English teachers to five municipal elementary schools and five municipal junior high schools at least once.
The education board is now considering canceling its contract with NOVA.
In the 2007 academic year, the municipal education board commissioned three English conversation school operators, including NOVA, to dispatch teachers to junior high schools and elementary schools under its jurisdiction, officials said.
NOVA is supposed to dispatch teachers to 79 junior high schools once or twice a week and to 286 elementary schools on several occasions a year.
However, NOVA, which has been in financial difficulty since some of its business activities were suspended in June by the government regulator over its illegal business practices, has failed to promptly pay wages to many of its teachers.
In response, a large number of NOVA teachers have quit their jobs or taken days off without prior notice. A shortage of teachers has forced NOVA to cancel the dispatch of some teachers to Osaka public schools, education board officials said.
http://mdn.mainichi.jp/national/news/20071024p2a00m0na022000c.html
Labor standards office questions Nova staff to prepare for charges
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