The court-appointed trustees of Nova Corp. have given up trying to rehabilitate the nation’s largest language-school chain and have chosen a Nagoya-based company to take over part of Nova’s business. Although the trustees’ quick decision suggested that a business solution was at hand and the new company says it will “basically hire” all Nova teachers and workers who want a job with it, the problem of unpaid salaries for Nova’s 7,000 workers, including some 4,000 foreign teachers, remains. Moreover, there are no prospects of refunds for unused lesson tickets still held by Nova students.
For the time being, G.education Co., a wholly owned subsidiary of the G.communication group, will take over 30 of about 670 Nova branches. G.education, which runs cram and English schools, hopes to take over 200 branches between six months and a year from now. But this will be far from satisfactory for some 300,000 Nova students. In fact, the G.communication head says it will be difficult to reopen the remaining branches.
Nova students can receive lessons similar to Nova’s if they pay 25 percent of what they have already paid for lesson tickets; enrollment fees will be waived. Even so, the arrangement means a new financial burden for Nova students.
Nova students are especially worried about refunds for the money they have paid in advance for lessons. This up-front money amounts to ¥60 billion to ¥70 billion. These students constitute “the largest number of creditors” in postwar Japan. Since G.education is not prepared to make refunds, public administrative bodies should involve themselves to help solve the problem.
The failure of Nova points to the need for the education industry, including language-school chains, to take measures to stabilize their business and increase trustworthiness. An encouraging sign is a move by several major English language-school chains to welcome more than 8,000 Nova students by offering discount rates. They have decided to cooperate with each other in order to restore people’s trust in language-school chains and to minimize the effect of the Nova problem.
Reemployment offers likely for half of Nova staff, teachers
Nagoya-based G. communication Group, which will take over business operations of the failed English-language school chain Nova Corp., announced Monday it had issued unofficial job offers to 1,760 foreign teachers and Japanese staff formerly employed by Nova.
G. communication plans to issue job offers to a further 694 people from Nova who have registered their desire to be reemployed, meaning about half of the about 4,900 workers employed by Nova when the firm filed for court protection under the Corporate Rehabilitation Law stand to gain reemployment.
G. communication’s subsidiary G. education Co., which operates cram schools and will take over Nova’s operations, will begin offering lessons at 30 Nova branches from Wednesday.
About 3,500 people attended briefings about reemployment held by Nova on Friday and Saturday. Of these, 1,548 foreign teachers and 212 Japanese employees were given unofficial job offers.
Some of the further 694 people who requested reemployment are seeking positions with G. communication affiliates.
Furthermore, as G. communication received inquiries from some foreign teachers and Japanese staff who did not attend the briefings held last week, the number of people to be reemployed with the firm and its affiliates is likely to increase.
G. communication plans to assign 10 to 15 foreign teachers to each Nova branch, and expects to reopen more than 100 Nova branches before the end of this year.
Beyond Nova
On Saturday, meetings were held across Japan for Nova Corp. instructors and staff, to provide information about the sponsor’s plans for the future.
Given the short notice (about two days), there was an impressive turnout at the meeting I went to, one of two held at Nova’s office in Shinjuku.
A large number of the around-400 attendees were in suits and ties in anticipation of interviews planned for after the session. However, G.communication decided not to go ahead with the interviews on the day, which suggests that the high head count had taken them by surprise.
First to speak was Noriaki Takahashi, one of the court-appointed trustees, who explained the decision to choose G.communication from about a dozen potential sponsors.
“We evaluated all the offers fairly,” he explained, “and we came to the conclusion that the offer from G.communication was the best that was put forward.”
Where other proposals had offered only limited re-employment, “all instructors and staff who want to be employed will be employed, following a short interview,” said Takahashi.
A “Request for Employment” form handed out at the meeting states that “Even if there is no Nova school in your desired area of employment and you end up standing by at home, your salaries will be fully paid,” and “your monthly income shall correspond to your final monthly income at Nova.” (Later, one instructor asked what would happen if more people applied than could be employed, but this question was put back, and eventually went unanswered.)
Another reason the trustees chose G.communication was to protect the students, Takahashi explained.
“There was not one company that was prepared to pay the cancellation refunds,” he said, referring to Nova’s multibillion-yen debt.
Other companies offered only to waive their entrance fee, or to allow free study for a limited time, so the trustees felt “the offer to honor 100 percent of the lesson points at 25 percent cost was the best.”
Next, he spoke about unpaid wages. “Salary payments from G.communication will start on the day of employment with G.communication,” he said.
The outstanding salary payments were Nova’s responsibility, but examining Nova’s finances, the trustees had found “there was not even enough money to run the company for one day.”
Apparently, Nova had a small fund set aside, which will be used to cover a small proportion of the outstanding wages. The rest will need to be claimed from the government after Nova is declared officially bankrupt, likely in around two weeks, though the large number of claimants means the process may well take up to six months. Those leaving Japan were asked simply to leave their contact details, as they wouldn’t be able to rely on assistance from the Japanese embassies in their home countries.
The stage was then taken by Masaki Inayoshi, owner of G.communication, who explained his reasons for stepping in as sponsor.
“I wanted to accept this challenge,” he said. “This was the main reason for making this decision.”
He expressed surprise at the scale of the operation he has taken on, and quipped about the size of the hidden room in former Nova boss Nozomu Sahashi’s Osaka suite, getting one of the few laughs of the afternoon.
So, are the dark clouds finally being cast aside? Perhaps not, especially for those leaving Japan, but the future is becoming at least a little clearer.
Long-term prepaid tuition comes undone
The business failure of Nova Corp.–the nation’s largest English-language school chain–left about 300,000 students in the lurch. This raises the question of how customers can be better protected when a business goes belly-up.
G.education Co., a Nagoya-based cram school operator, will take over Nova businesses, which last month filed for court protection from creditors under the Corporate Rehabilitation Law.
Nova’s students are extremely unlikely to see any of the more than 40 billion yen that they put down for prepaid tuition. Nova had 670 schools nationwide. But G.education will take over up to 200 of Nova’s schools, and only 30 will be reopened this week.
Nova’s students have been hung out to dry. The risks of the prepaid tuition system that has become the norm in the industry have become all too evident. The government and related industries must set about creating a system in which customers can learn without worrying about whether their money will go down the drain.
Tuition fees are paid to a business operator in return for services received. When the operator cannot provide these services, prepaid tuition fees should be entirely refunded.
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Shifty calculations
In Nova’s case, the more lessons a student paid for in advance, the larger the discount they could receive. But when a student tried to cancel a contract, Nova settled the cancellation by using a higher unit price per lesson than when the contract was signed, thereby reducing the amount it had to repay. In April, the Supreme Court ruled Nova’s settlement method was illegal.
In June, the Economy, Trade and Industry Ministry ordered Nova to suspend for six months its soliciting and signing up of customers for new contracts of one year or longer due to its exaggerated advertisements, and for other reasons.
As the alarm bells began ringing louder and louder, as many as 100,000 students canceled their Nova contracts.
However, Nova was unable to meet the refund requests. The company had only about 1.8 billion yen in a reserve fund to cover an expected loss at the end of last business year.
The advance payment system is common practice not only at English language schools, but also at aesthetic salons and cram schools. Tuition fees paid for in advance are used for business operating costs, including salaries for lecturers and staff, rent for classrooms and office expenses.
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Preparing for the worst
A case like Nova was just waiting to happen, albeit perhaps on a smaller scale. To help prevent a repeat, related business industries should consider pooling a certain amount of money from students’ advance payments.
Some observers have proposed a fiduciary refund preparation scheme be established in cooperation with financial institutions, in which a certain amount of money from advance payments is managed separately from the operator.
An industry organization for foreign language schools has a self-regulatory rule to keep a contract for classes to less than one year. However, Nova set the term of its contracts for up to three years, as it did not belong to the organization. This was one major factor behind the sheer scale of losses suffered by students who paid in advance for their classes. This issue should be carefully examined.
Leaving this rule to the discretion of business operators and the industry will do little to dispel anxieties whipped up by Nova’s demise.
The Economy, Trade and Industry Ministry should actively be involved in formulating an industry guideline and other necessary measures.
From the viewpoint of protecting customers, measures allowing administrative punishment to be dished out if necessary also should be introduced.
NOVA students form support group
Students of failed English conversation giant NOVA Corp. have formed a support group, and are urging others to join them.
The NOVA Seito no Kai was formed over the weekend by students of the failed chain.
Organizers say they aim to work collectively to negotiate with NOVA’s apparent savior, Nagoya-based company G.communication grp. and the Ministry of Economy, Trade and Industry to ensure they are treated fairly by the failed company’s new operators.
G.communication grp. has promised to allow students to take classes they had paid NOVA for, as well as to offer jobs to the failed chain’s teachers.
The NOVA students’ support group is calling on all students involved with the English conversation chain to join its ranks, including those who were fighting the company over refunds for canceling contracts before they had been completed.
http://mdn.mainichi.jp/national/news/20071112p2a00m0na014000c.html
G.communication set to reopen Nova school in Nagoya
G.communication Co., due to take over part of the business operations of failed language school operator Nova Corp., plans to reopen a Nova school in Nagoya as early as this weekend, company officials said Sunday.
The Nova Kurokawa school in Nagoya’s Kita Ward would be the first Nova school to be reopened by G.communication, a Nagoya-based operator of cram schools, language schools and restaurant chains.
The company is looking to reopen 30 schools by the end of this month, the officials said.
G.communication is expected to reemploy Nova staff and foreign instructors at the Kurokawa school, the officials said. The company briefed Nova employees and foreign teachers [whpo are also employees] about their reemployment on Friday and Saturday.
The company has apparently decided to reopen the school due to its proximity to the company’s head office and its large scale of operation.
The acquisition of Nova operations will be conducted through G.communication’s wholly owned subsidiary, G. Education Co., which runs a chain of 42 English conversation schools under the “EC Inc” brand.
The company is also aiming to run schools elsewhere including in Tokyo, Osaka, Sendai and Fukuoka, and is already in negotiations with landlords in order to restart operations, the officials said.
G.communication also said it will rebrand its EC school in front of Nagoya Station as Nova.
Nova, based in Osaka, filed for court protection from creditors Oct. 26 under the Corporate Rehabilitation Law after the scandal-tainted company gave up on attempts to revive its business.
Nova students form group, vow to take action
About 70 former students of bankrupt language-school Nova Corp. launched the Nova Students’ Association on Saturday to organize the abandoned pupils.
“Former students have been left out,” said Joji Yamabuki, 44, head of the group. “We would like to gather as many students as possible to take a joint action.”
Following its establishment, the group submitted a list of requests to Nova’s court-appointed administrators, asking them to disclose the details of how G.communication grp. was selected to takeover some of Nova’s operations.
The group said it plans to hold another meeting Nov. 16 in Chuo Ward, Osaka, to gather and disseminate more information about Nova.
Meanwhile, Nova held separate meetings for its former employees and teachers in 22 prefectures to explain their employment conditions and how to apply for unpaid salaries.
In the Tokyo meeting, officials also distributed job applications for G.communication.
According to Nova officials, a total of 2,300 people attended the meetings in Tokyo and Osaka. Masaki Inayoshi of G.communication also attended one of the meetings.
Nagoya-based G.communication has said it will take over 30 of Nova’s schools.
NOVA impresario used palatial presidential penthouse to pork the pick of his staff
Nozomu Sahashi, the ousted president of NOVA Corp., was getting into some bunnies a bit different to the stuffed toy symbol of the struggling English conversation school chain, Sunday Mainichi (11/18) says.
Sahashi, 56, had decked out a secret room attached to the President’s Office at NOVA headquarters in Osaka’s Naniwa-ku with a Jacuzzi, sauna and double bed in a room decorated every bit as gaudily as the tackiest of love hotels.
Receiver Toshiaki Higashibatake opened the room to the media to show the world just how much Sahashi was using the publicly traded NOVA as his own personal company, including using the chain to fund the 70 million yen it cost to set up his secret love nest, as well as the 2.7 million yen a month in rent that came with it. NOVA was also forced to foot the bill for a similar love palace for the ex-president in Tokyo, all the while failing to pay thousands of its employees’ wages and rent.
“Former President Sahashi started using this (Osaka) office from about 2002,” a NOVA spokesman tells Sunday Mainichi.
From about the same time, NOVA’s finances began taking a turn for the worse. By its settlement of accounts at the end of March this year, it was 3.1 billion yen in debt. NOVA owes 4 billion yen in unpaid wages and has already received payment from students in the vicinity of 40 billion yen for lessons it has not yet provided. Sahashi, though, has no such money worries. In 2005, he took home an annual salary of 300 million yen. And last year also pocketed a pay packet of 150 million yen.
Sahashi had a liking for bunnies that went beyond the NOVA bunny he created to become the symbol of the company.
“He’d take a gorgeous secretary with him every time he went to some big meeting or party. He used secretaries who had once been top nightclub hostesses in Tokyo’s Ginza and Osaka’s Kita. They were all gorgeous women, every bit as attractive as showbiz idols or models,” a former NOVA executive tells Sunday Mainichi. “He had his favorite foreign teachers and picked out several women for serious relationships; I suppose that’s what he used to use the secret room in the president’s office for.”
In the early days of NOVA, back in the first half of the 1980s, Sahashi was apparently notorious for housing his hostess lovers in dormitories he had set up for foreign teachers at his company’s schools.
“He broke a lot of hearts, of both Japanese and foreign women,” says a resident of the area where Sahashi’s lovers used to be shacked up. “He used to get sick of women pretty quickly and would soon find new love. We were always hearing him screaming out in lover’s tiffs.”
Despite his failings, some within Japan’s McEnglish industry acknowledge Sahashi had his successes.
“He was certainly an ideas man,” an industry insider says. “At a time when the market rate for classes was 10,000 yen a lesson, he was able to provide classes for under 2,000 yen a pop, which really drew in customers. He was also a big supporter of youngsters, having employed lots and lots of very young teachers.”
Sahashi also oversaw NOVA as it grew from being a tiny Osaka conversation school that grew to become a nationwide chain far larger than any of its competitors. The NOVA bunny, in its early days at least, also proved to be a tremendous financial success for the company because of its outstanding merchandising sales, and was another Sahashi creation.
But the Osaka Prefecture native son of school teachers also received plenty of help along the way. One of the prime reasons was indirect government backing through a national program to encourage working people to study.
“This program subsidized 80 percent of the cost for those who decided to attend an English conversation school,” a business journalist tells the respectable weekly. “In effect, this was our tax money. Which means that taxpayers’ hard-earned cash was ending up in Sahashi’s pockets.”
As the NOVA empire crumbled around him and his board let loose with the ax, Sahashi was rumored to have fled overseas to avoid possible prosecution or retribution, but it appears he is actually still in Japan.
“According to a lawyer for the former president, he is spending his time traveling back and forth between Tokyo and Osaka,” a NOVA spokesman tells Sunday Mainichi. “We have still yet to be able to talk directly with him.”
http://mdn.mainichi.jp/culture/waiwai/face/news/20071109p2g00m0dm004000c.html
Foreigners still dogged by housing barriers
Having arrived in Tokyo from Seoul about a year ago, Il Yeong Eun, like many foreigners who come to Japan, soon encountered a major difficulty ? housing discrimination.
Il, 25, together with two South Korean friends who also came to Japan around that time, visited three real estate agencies to rent an apartment in Shinjuku Ward. But the agencies turned them away because they were foreigners.
“I never expected to be refused,” said Il, who goes to a Japanese language school in the ward. “I felt like I was treated like a criminal.”
Fortunately, she found a one-bedroom flat through a real estate agency that one of her friends introduced her to. The firm’s South Korean employee takes care of foreign customers by teaching them Japanese customs related to living in rental apartments.
Japan’s foreign population is steadily increasing. Government data show the number of registered foreign residents stood at 2.08 million in 2006, up from 1.48 million a decade ago. Nonetheless, housing discrimination against foreigners is surprisingly strong even in Tokyo.
According to a 2006 survey conducted by Tokyo-based nonprofit organization Information Center for Foreigners in Japan, 94 percent, or 220 respondents, out of 234 foreigners in Tokyo who visited real estate agents said they were refused by at least one agent.
To ease the discrimination, the public and private sectors have gradually come to offer various services to help foreigners find properties.
The Land, Infrastructure and Transport Ministry launched the Web site Anshin Chintai (safe rental housing) in June to provide rental housing information and lists of real estate agents and NPOs that can support foreign apartment-seekers.
“We hear that some foreign residents have been refused (by landlords or rental agents),” said Eiji Tanaka, a ministry official in charge of the project. “The system is to network local governments, rental agents and nonprofit organizations” to effectively help such foreigners as well as the aged and the disabled.
So far, Tokyo, Fukuoka, Osaka and Miyagi prefectures and Kawasaki have joined the project. For example, 237 real estate agents in Tokyo are listed as supportive firms.
The site ? www.anshin-chintai.jp ? is available in Japanese only, but foreigners who have difficulties with the language can ask local governments to explain the information on the site to them, according to the ministry.
The ministry is trying to have other local governments join the system and is considering offering the content in other languages as well, the official said.
The Japan Property Management Association, involving about 1,000 real estate agencies, also launched the Web site Welcome Chintai ? www.jpm.jp/welcome/ ? in September to introduce rental properties in six languages ? Chinese, English, Korean, Mongolian, Spanish and Russian.
Information about properties and procedures and customs to rent rooms are put up by rental agents on the site’s six blogs ? one blog in each of the six languages.
“The Web site is a tool for us to smoothly accept foreign customers,” said Masao Ogino, chairman of the association’s international exchange committee that runs Ichii Co., the real estate agent in Shinjuku Ward.
As real estate agents that registered with the site write about their experiences of dealing with foreign customers, other member companies can gain knowhow, he said.
But opening such Web sites is not enough to help foreigners, said Toshinori Kawada, a Meiji University student who set up The-You Inc., a rental housing consulting firm, in Shinjuku Ward last year.
“(Foreigners) often find apartments through word of mouth. Distributing fliers at places where they gather is more effective” than offering information online, he said, noting his company’s site showing properties for foreigners, launched in July, has failed to draw many viewers.
A key to solving the housing problem faced by foreigners is to ease landlords’ anxieties about accepting them as tenants, Kawada said.
Landlords and rental agents often say they are concerned that foreign tenants might not have proper guarantors and might cause trouble with neighbors.
To ease such anxieties, his firm gives rental agents and landlords consultations on foreign tenant management, such as teaching them rules of everyday life here and collecting rents, by utilizing the expertise he gained by working at a foreign customers-only real estate agency for a year.
These private-sector moves have come as real estate companies and landlords think the rental housing market targeting foreigners has potential as Japan struggles with a declining birthrate.
“An oversupply (of rental apartments) makes it difficult (for landlords) to manage their properties. So they reluctantly turn to foreign customers,” Kawada said.
Ogino of the association said more and more real estate agents would enter the market as the association is trying to enlighten them and pass along knowhow to handle foreign customers through its new site.
“Our industry is finally moving toward internationalization as some agents now hire foreign employees,” Ogino said. “If real estate agencies can obtain knowhow to deal with foreign customers, they could gain more benefits and make foreign residents happy.”
Nova staff briefed on details of new job offers
Failed English-language school chain Nova Corp. held briefings in Tokyo and Osaka on Friday for about 200 of the firm’s management-level employees, detailing the procedures required to gain reemployment with G.education Co.
Interviews for the firm’s employees wishing to work for G.education, based in Nagoya, which will take over Nova’s operation, were also conducted by Nova in Tokyo and Osaka the same day.
Nova will offer further interviews to about 4,900 nonmanagerial employees and foreign teachers on Saturday at about 20 locations.