Nova (eikaiwa)

Nova
Private (owned by Jibun Mirai Associe Co. Ltd)
Industry Language instruction
Founded Osaka, Japan (1981)
Headquarters Osaka, Japan
Key people
 Nozomu Sahashi (founder, former CEO)
Masaki Inayoshi (former owner)
Revenue Decrease 57,064 million JPY (2007)[1]
Decrease −2,495 million JPY (2007)[1]
Website www.nova.co.jp

Nova (formerly Nova Group) is a large eikaiwa school (private English teaching company) in Japan. It was by far the largest[2] company of this type until its widely publicized collapse in October 2007. Before its bankruptcy, Nova employed approximately 15,000 people across a group of companies that supported the operations of and extended out from the "Intercultural Network" of its language schools. The scope of its business operations reached its peak in February 2007 following a rapid expansion of its chain to 924 Nova branches plus a Multimedia Center located in Osaka.

Nova, known for high-priced lesson packages,[3] and later plagued by lawsuits and negative publicity, began to decline in earnest almost immediately after the Ministry of Economy, Trade and Industry placed a six-month ban against soliciting new long-term contracts from students on the company on 13 June 2007.[4] The impending financial crisis facing Nova related to a rapid increase in refund claims, significant drops in sales figures, and deterioration of its reputation, came to the fore in September 2007 when Nova began to delay payment of wages and bonuses to staff. The NAMBU Foreign Workers Caucus in Tokyo estimated that up to 3,000 staff had not received their salaries on time. A solution for Nova's failure to pay wages was promised by 19 October in a fax sent to branch schools. On 23 October the Osaka Labor Standards office accepted a demand by unionized Nova instructors to investigate criminal charges against Nova President and founder, Nozomu Sahashi, over delayed and unpaid wages, but Sahashi was ultimately not charged.

It took roughly eight months for the company to reach the point where it filed for bankruptcy protection on 26 October 2007 whereupon the trading of its stock was suspended and was delisted on 27 November 2007. On 6 November 2007 court-appointed receivers announced that Nagoya-based G.Communication would sponsor Nova. Initial plans by G.com were to start with reopening up to 30 schools in various locations including Tokyo and Osaka by the end of November 2007. G.com later sold off its 490 Nova and 167 GEOS English schools on 1 October 2010 to Inayoshi Holdings, with 50 of the GEOS schools slated to join the Nova group under the name "Nova x Geos"[5] on 1 November 2010. As of 1 February 2012 Nova is owned by Jibun Mirai Associe Co. Ltd.[6] On September 2, 2013 Jibun Mirai established a wholly owned subsidiary called Nova and fully reinstated the name Nova.[7]

As of January 2014 Nova operates 310 branches,[8] with 66,000 students.[9]

History

A Nova branch

The Nova Group was founded in August 1981 and was led by CEO Nozomu Sahashi.[10] Nova's corporate headquarters were in Osaka. The company was the largest employer of foreign nationals in Japan,[11] employing 7,000 foreign workers,[12] 5,000 of whom were employed as language instructors.[13] Each year, Nova hired between 2,500 and 2,600 foreign teachers to replace those who had left.[12] Although instructors were not required to have actual educational training, the company provided a salary bonus for teachers with an accredited TEFL certificate, any master's degree, or a degree in education. Teachers were admitted directly after university graduation with any degree that allowed them to obtain a work visa. Instructors from participating countries[14] who can obtain a Working Holiday Visa were admitted without a degree. They worked fewer hours and earned less pay than full-time instructors.

Sahashi originally established the company with two high school graduates from Sweden and Canada whom he met via a friend who was studying abroad in Paris. They opened the first classroom in Shinsaibashi, Osaka. The name Nova (an astronomical term for a stellar explosion) was chosen by Sahashi as he felt it would appeal to prospective students.[15] In November 1996, Nova's initial public offering[10] was met with several demonstrations in front of Nomura Securities and the Tokyo Stock Exchange. A complaint filed by The Nova Union stated that the company was violating Japanese exchange laws by falsely stating that there were no unions at Nova, nor pending litigation, and that labor relations between the company and its employees were amicable and untroubled.[16][17][18]

Since 1997, Nova steadily expanded the number of its schools as its business grew, going from 239 schools to 623 in 2004.[10] By 2002, Nova had captured 50% of total market share by revenue (61.5 billion yen) and in 2003, Nova had gained a 66% market share by number of students, some 410,000 students in total. However 2005 saw Nova lose ground in total sales revenue.[19]

The company was in the red in the business year ending in March for the second consecutive year,[20] posting net losses of 3 billion yen in fiscal 2005 and 2.4 billion yen in fiscal 2006 after a failed expansion attempt. The number of students fell to 418,000 by the end of March: down 12.1 percent from a year earlier.[21] On 20 September 2007, NOVA announced it was considering a large-scale closure of up to 200 branches.[22]

Events after the collapse

The announcement of court protection and the admission that operations at all Nova branches would be temporarily shut down shocked the estimated 420,000 Nova students as some of them had paid their tuition in advance and feared their money might not be refunded. The Ministry of Economy, Trade and Industry asked the Japan Association for the Promotion of Foreign Language Education, an industry body, to call on its member schools to accept Nova students. METI also requested consumer credit companies not to seek loan repayments from the 20% of Nova students who paid their tuition with loans because Nova has ceased operations and they could not take lessons.[23]

Nova President Nozomu Sahashi, missing since before his dismissal, was officially replaced by three board members, including co-founder Anders Lundqvist. The Osaka Labor Bureau, a local branch of the Ministry of Health, Labor and Welfare, launched a consulting counter with five interpreters for foreign Nova instructors.[24]

The immediate effect of collapse of Nova was the sudden unemployment of approximately 4,500 foreign teaching staff and 2,000 Japanese workers. The desperate situation of many of the foreign teachers raised concerns over an apparent lack of an adequate safety net for foreign workers in Japan. Some teachers could not even afford a plane ticket home.[24] The Australian and British embassies in Japan set up information pages on their websites to assist their nationals and Qantas airline offered reduced airfares for Australian Nova employees wishing to return to Australia.[25] The collapse led to huge increases in union membership, particularly in NUGW Tokyo Nambu (future Tozen Union) and in Osaka's General Union. The unions had a chance to appeal their case to the public thanks to extensive coverage on TV, radio and newspaper. The unexpected influx of ex-Nova teachers on the job market led to immense numbers of applicants vying for a much smaller number of employment opportunities. Language education companies, even some outside Japan, attempted to tap into this labor force.[26]

The publicity, generated by the collapse in Japan and in other countries, also threatened to damage the reputation of Japan's foreign language industry although the Japanese government attempted to minimize the damage by pledging non-specific support despite remaining essentially uninvolved in the chaotic collapse. The government did set up a special consultation booth briefly at the Hello Work public employment office in Shinjuku in Tokyo for Nova instructors seeking advice[3] but maintained its distance as its position was that the bankruptcy of Japan's biggest foreign language school chain was a private sector matter.[23]

Although Nova was unable to successfully attract a corporate partner to stave off the bankruptcy, twelve companies quickly applied for sponsorship to rebuild Nova Corp, some of which made specific proposals to turn around the company.[27]

Restructuring

On 7 November 2007, G.Communication, a Nagoya-based operator of cram schools, language schools and restaurant chains announced it had been unofficially selected to take over part of the operations of failed Nova Corp before any official decision by the board of trustees had been released. G.Education Co, a subsidiary of G.communication, would take over part of Nova's operations in addition to the chain of EC Inc English conversation schools of Hokkaido it runs. Nova Corp assets not absorbed by G.communication would be liquidated by court appointed administrators. The administrators claimed they had to select a sponsor quickly even before the court approved Nova's reconstruction program as value of Nova corporate assets were eroding each day as employees and students left.[28]

Initial plans by G.communication were to start with reopening the Nova Kurokawa school in Nagoya's Kita Ward with the intention to reopen up to 30 schools in various locations including Tokyo & Osaka by the end of November 2007. G.communication held several briefing sessions for Nova employees and foreign teachers about their reemployment. Although many of the foreign teachers were not subsequently re-employed, G.communication has opened 465 schools as of January 2010.[29]

G.communication Co. sold off the Nova and Geos chains of English schools on 1 October 2010. An investment company led by Masaki Inayoshi, who formerly served as chairman of G.communication, purchased the subsidiary of the Nagoya-based firm that ran both GEOS and Nova.[30] At the time of sale, Nova had 490 locations and Geos 167.

Nova changed ownership again in 2012, being purchased by Jibun Mirai Associe Co. Ltd. However G.communication continues to operate some Nova schools through its subsidiaries G.networks and G.taste, under license from Jibun Mirai Associe.[6]

Branches as of 2012

As of May 2012 there are 212 Nova branches operating.[8] 211 are located across Japan: nineteen in Hokkaido, nineteen in Kyushu, ten in Chugoku, six in Shikoku, thirty-six in Kansai, seventy-six in Kanto, and forty-five in Chubu; Nova has one branch located in Hawaii.[31]

Marketing and services

The interior of a new Nova school showing the new design motifs

Prior to its 2007 bankruptcy, the language school chain aggressively operated extensive advertising campaigns in print and on television and had a very high profile and strong brand recognition.[32][33] Until a short time before its collapse, Nova used an animated pink rabbit (the "Nova Usagi") as the popular face of the company, which appeared often as the focus of Nova's TV commercials and other advertisements.[34] The rabbit appealed strongly to children and became extremely popular. The introduction of "Nova Usagi" merchandise saw sales of over 260 million yen in the first two weeks of availability.[35] Nova partially discontinued using the rabbit in January 2003 after JSPCA animal rights activists lodged a protest over a commercial that featured the rabbit getting its ears ripped off, citing concerns of its impact on children's awareness of death.[34]

Many Nova branches were (and still are) located near train stations, and the company used the term ekimae ryūgaku ("study abroad near the train station": 駅前留学) in its promotional materials. The catch phrase helped Nova to become the nation's biggest chain of English language schools.[36] It similarly promoted its interactive multimedia network as ochanoma ryūgaku ("study abroad from the living room": お茶の間留学).[37]

Nova's success was also attributed to its promises of a foreign teacher, smaller class sizes than its rivals, and an appointment system that allowed students to schedule and attend class at their convenience.[38] However, in 1997, 18 students filed a grievance with the Tokyo Metropolitan Government claiming they were unable to make lesson appointments when they wanted, despite the school's advertisements that its students could reserve classes "at any time". The students said they had purchased hundreds of tickets when joining the school, but found it impossible to use them all by the expiry date due to inflexible scheduling procedures. Nova agreed to a proposal by the Damage Relief Committee to repay a total of 3.8 million yen and said the dispute had been the result of a misunderstanding.[39]

Services

The company offered English courses for adults, children, business English and test preparation (TOEFL, TOEIC) as well as Chinese, French, Spanish, Italian, and German instruction.[10] Through subsidiaries, the company also offered telecommunications and travel agency services and in-house English instruction, translation and interpretation services for Japanese corporations.[40][41] While Nova's main product was English language services, the company shifted some of its focus toward China, as 100,000 of its students studied Chinese.[42]

Instructor employment system

Employment and labor relations

Drug testing

In 1994, after two instructors were arrested on drug charges in August and September, Nova asked all 3,100 instructors to sign an agreement to have a mandatory drug test, the results of which would be reported to the police. The drug test only applied to foreign staff.[44][45] The Osaka Bar Association wrote an opinion that the policy was a violation of the teachers' right to privacy.[46] Nova claimed consent forms had been received from more than 90 percent of employees. According to the union, no instructors were ever required to take a drug test.[47] On 31 January 2007, seven Nova teachers were charged with possession of illegal drugs arising from the arrest of two men in Roppongi on 19 November 2006.[48]

Shakai hoken

In March 2005, after NUGW Tokyo Nambu and the General Union filed a complaint, Nova and other English schools in Japan were investigated by the Social Insurance Agency for not enrolling employees in Social Insurance (社会保険, Shakai Hoken). The law stipulates that companies with full-time workers who have been in Japan for more than two months must enroll them in the system. Payment is split between employer and employee, each paying about half the monthly premium amount.[13]

In June 2005, Nova amended its working times for instructors and standardized lesson length to 40 minutes, with two minutes either side for lesson planning and student evaluation, resulting in a total lesson time of 44 minutes. Six to eleven minutes of unpaid time was left between classes. As a result of changes to working hours, regular non-titled teachers whose work weeks were reduced to slightly under 30 hours became ineligible for shakai hoken, giving an estimated savings to the company of over one billion yen in annual premium payments. Such employees can register for National Health Insurance (a different system to Shakai Hoken), although this system does not offer coverage for time taken off work due to illness. Nova also offered its own private insurance program.[11]

Anti-fraternization policy

After six employees were fired for violating a clause in their contracts that forbade interaction between students and instructors outside the classroom, a complaint was filed with the Osaka Bar Association by two employees who were members of the General Union, one of whom had been dismissed as a result of the policy. The two instructors claimed the policy violated their human rights and argued it was racial discrimination since it only applied to foreigners. The clause in Nova's labor contract stated that foreign teachers "should not have a relationship with customers outside the workplace."[49] The Osaka Bar Association subsequently issued a non-binding recommendation that the company drop the clause, saying that it restricted instructors' freedom of association and discriminated between foreign and Japanese staff.[50] The company said the clause was there to "protect both the teachers and the students from trouble, as they do not know each other's cultures and customs."[51]

On 11 December 2005, an Australian who had been teaching in an Osaka Nova branch reached an out-of-court settlement of ¥400,000[52] and a letter of commendation after claiming that the policy had interfered with his life. The then 30-year-old teacher had been demoted and transferred to another school branch in 2004 when Nova found out he had a relationship with a 21-year-old student.[53]

Contested dismissals

In November 2004, union supporters gathered outside Nova's Shinjuku Honko school, protesting dismissals of five teachers, three of whom had been working at Nova for more than 10 years. All were members of the Nova union (a branch of the NUGW). The union alleged they were dismissed due to their union activities.[54]

In March 2006, Kara Harris reached a financial settlement with Nova for approximately 7 million yen after she had been dismissed following her request to be made a permanent employee during negotiations with Nova over her sixth consecutive contract.[53][55] Nova had originally offered her a 12-month extension and, after disputes with her manager over several issues, she sued Nova for wrongful dismissal. Successive courts found that Harris was unfairly treated by Nova.[53]

Unions

Throughout Japan staff at Nova are represented by various unions. In Kyushu some staff belong to the Fukuoka General union,[56] in Kansai some instructors belong to the General Union.[57] Both of these unions belong to the National Union of General Workers, which is itself a member of the confederation Zenrokyo (National Trade Union Council).[58]

General Union Nova branch

Establishment and action against discriminatory drug tests

In 1994, after two Nova instructors were arrested on drug charges in August and September, Nova asked all 3,100 instructors to sign an agreement to have a mandatory drug test, the results of which would be reported to the police. The drug test only applied to foreign staff.[44][59] This action led to the General Union branch of Nova being founded on September 6, 1994. At the same time there was also a NUGW Nova branch founded in Kanto.[60]

The Osaka Bar Association wrote an opinion that the policy was a violation of the teachers' right to privacy.[61] Nova claimed consent forms had been received from more than 90 percent of employees. According to the union, no instructors were ever required to take a drug test.[62]

GU forces re-investigation of Nova President Nozomu Sahashi

After Nova's bankruptcy, the GU sought Sahashi's indictment over non-payment of wages. The Osaka prosecutor's office declined to do so, so the GU appealed to the prosecutor's auditors, who found the lack of indictment "unjust".[63] Sahashi was ultimately not charged.

Allowances protected

After the March 11th 2011 earthquake, when embassies were urging their citizens to evacuate, Nova pressured instructors to move to Tokyo or have allowances cut. The GU members at one Nova branch protested and negotiated with Nova and the allowances were repaid.[64]

Firing of disabled teacher withdrawn

In August 2013 Nova announced that they were non-renewing the contract of a teacher, in effect firing him. The teacher had a medical condition that made commuting difficult, but had never caused him to be late or affected his work. Previously the company had reduced his hours for two years in a row, which had resulted in him being removed from the Japanese government social insurance.[65] As the teacher's condition was made worse by stress, he didn't pursue this. After he was non-renewed, the GU protested strenuously, meeting company representatives on August 21. Union representatives criticised the Nova for a "lack of humanity" and raised the prospect of demonstrations over the issue. During the meeting Nova withdrew the non-renewal.[66][67]

Government intervention

Concerns about refund policy

On 14 February 2007, the Ministry of Trade, Economy and Industry and the Tokyo Metropolitan Government conducted on-the-spot inspections at Nova Headquarters in Osaka and several other branches.[68] Officials said that several Nova schools failed to give full refunds to students who canceled their remaining lessons after paying in advance. Other clients said that Nova refused to accept unconditional cancellation of lessons, claiming the eight-day "cooling-off" period had expired, and had also deceived students by giving false information about their cancellation procedures.[69][70][71] The Kyoto Consumers Contract Network NPO also expressed similar concerns.[72] Reductions in the number of teaching staff since 2004 had created a situation where students found it increasingly difficult to schedule classes, precipitating a substantial increase in complaints.[73] During the February office inspections the Ministry discovered a memo in which Sahashi stated there was no need to stop pushing sales despite difficulties meeting student reservations due to teacher shortages.[74] Consumer centers nationwide received more than 1,000 complaints and queries regarding Nova annually[75] and the National Consumer Affairs Center of Japan says it received some 7,600 complaints or inquiries about Nova's contract and cancellation policies between 1996 and March 2007.[76]

Under Nova's system, students bought points in advance to pay for their lessons. The larger number of points they bought, the smaller the individual class fee became. The case taken to the top court involved a former student who had purchased 600 points at a rate of 1,200 yen per lesson. The student canceled the contract after using 386 points, Nova offered a refund based on a calculation that 300 points were bought, resulting in a price of 1,750 yen per lesson.[77] Nova said the value of the used points should be calculated as having been bought in smaller lots.[75]

The Asahi Shimbun cites an example of a contract for 100 lessons, which would cost 230,000 yen in advance, for a per-lesson fee of 2,300 yen. A contract for 600 lessons would require an advance payment of 720,000 yen, or 1,200 yen per class. But if a person with a contract for 600 lessons canceled after taking only 100 classes, Nova would apply the fee of 2,300 yen per lesson, and the student would receive a refund of 490,000 yen. Such students say the contract for 1,200 yen per lesson should have applied in these cases, which would result in a refund of 600,000 yen.[71]

Supreme Court appeal rejected

On 4 April 2007, Nova's appeal on two lower court rulings was rejected by the Supreme Court which described Nova's refund policy as invalid and in violation of specified commercial transaction law.[78][79] The ruling prompted the Ministry of Trade, Economy and Industry to revise the regulations for the specified commercial transaction law to prevent a recurrence of trouble.[80]

On 13 June 2007, LDP Lower House member Yasuhide Nakayama acknowledged he was accompanied by Sahashi and vouched for the company during a meeting with Osaka Mayor Junichi Seki on the morning of 22 May 2006, during the court dispute over the company's refund system. Nakayama, who was elected from an Osaka constituency (of which Sahashi was a member of the lawmaker's support organization) recalled saying at the time that it was "not right by social norms that Nova's refund rule is unacceptable" and explained "it is a politician's job to help out when a supporter is in trouble." Nakayama stated it was not his intention to exert pressure and Mayor Seki said he did not think the judgment of city officials was swayed by the lawmaker's visit.[77]

Industry minister Akira Amari also admitted on 22 June 2007 that he met with Yasuhide Nakayama earlier that year in February shortly after his ministry began investigating the school. Nakayama sought a meeting with Amari to express concern that the ministry might discipline the school over its fee discount system. Amari stated that Nakayama did not try to sway him from punitive action.[81]

Business restrictions imposed

On 13 June 2007, the Ministry of Economy, Trade and Industry imposed a six-month ban on Nova from soliciting, accepting or finalizing new contracts for long-term courses that last for over a year or 70 hours.[82][83] The ban was imposed because of issues regarding refunds for the cancellation of contracts.[84] The six months suspension order did not affect those who had already signed up for lessons, meaning that Nova's students were able to continue taking classes.[83]

The ministry also said that Nova failed to comply with a "cooling-off" system provided for in the specified commercial transaction law. Under this system, consumers can cancel a contract without conditions if the cancellation is made within eight days from when the contract was signed. At Nova, potential students first registered their name, address and other data before finalizing their contracts. An official application to the school was made several days later, after the details of the contract are decided upon. Nova told students who wanted to quit that they could not use the cooling-off system, claiming that the day students registered their data was the first day of the contract.[75] Ministry officials were quoted as saying that the actions of Nova were "organized and malicious".

On 15 June 2007, the Ministry of Health, Labor and Welfare said that Nova's English language courses would no longer qualify for government subsidies for those engaged in educational training authorized by the welfare ministry to improve the abilities of the unemployed and other people. In 1999, Nova's 32 courses were approved for the subsidies program. In fiscal 2006, about 4,700 people received a total of 560 million yen in subsidies under the program. Since 1999, around 71,000 Nova students received a total of about 16.1 billion yen in such subsidies.[85] Nova submitted a business improvement plan to the Tokyo government in late June 2007 as required by the METI conditions. Originally instructed to submit the plan on 10 June, Nova postponed the submission until 24 June.[86] The plan was rejected on the basis that it was lacking in concrete details and the planned improvement measures were deemed "insufficient". Nova was requested to submit an additional report.[87]

Events following restrictions

In an interview in The Daily Yomiuri on 16 June 2007, Sahashi said he was considering offers of capital and business alliances from several companies in various industries, including retail firms, to deal with an expected drop in sales and to restore trust in the company and possibly selling off properties and real estate in Osaka estimated to be worth several billion yen.[88] A capital alliance would have served to improve its creditworthiness and secure operating expenses.[21]

In July 2007, Sahashi met with Hideo Sawada, chairman of H.I.S. travel agency, to discuss a financial assistance as well as a business tie-up[89] but the meeting did not conclude with a decision.[90][91] Although Sahashi had rejected the possibility of a business affiliation with another English school,[88] Benesse Corporation (parent company of Berlitz Language Schools and provider of home nursing services) announced that it would not be undertaking any business relationship with Nova[92] and saw no synergy between the two companies.[93]

Sahashi indicated the company might have issued new shares to strengthen its capital and that Nova management "[would have to] take responsibility," stating the company would set up an internal inquiry and management reform committee to investigate the scandal, consider disciplinary measures of its executives (including himself), and examine how best to avoid scandals in the future.[85][94] Sahashi also said that the company would not need assistance from financial organizations[88] During its annual stockholder meeting in June, he apologized for causing the disciplinary action by the government[94] and told the shareholders, "We'd like to regain your trust as soon as possible". Forty-six shareholders attended, and one shareholder who had apparently lost faith in the current Nova management called on them to resign.[95] In response to this call, Sahashi refused stating "If I resign, the company will collapse,".[94] On 14 August 2007 Nova announced and subsequently sold 170,000 new shares on 30 August.[96]

2007 financial crisis

Indications of an impending financial crisis stemmed from a rapid increase in refund claims that total nearly 5,000,000,000 yen nationwide.[97] A 21 August 2007, article in the Toyo Keizai, Nova was described as repeatedly delaying payment to business partners and banks, falling into arrears for printing costs at the end of July, asking an ad agency to defer a payment.[98] Nova's 2007 first quarter financials showed a loss of 4,300,000,000 yen, a 19% decrease in sales compared to the previous year period, and an overall 19% decrease in recurring profit.[99] Nova cited the decrease in the number of students and deterioration of its image as an explanation.[100][101] The Asahi Shimbun reported on 11 September 2007, that Nova had made a request to an asset management consulting company, requiring them to return an outstanding amount of 8 million shares that were loaned to them on 30 July 2007. Nova had previously used the asset management consulting company to arrange short term financing with an 11 million share stock loan on 29 July 2007.[102] BNP Paribas had obtained the 8 million shares from a third party on 30 July selling them on 4 September.[103] Commenting on its temporary possession of Nova shares, BNP said it had been the result of the asset management consulting company exercising its option.[104]

Unpaid/Delayed wages

A decline in the stock price following the release of Nova's 2008 fiscal year first quarter financials[99] was preceded by news of a delay in payment of wages and bonuses to some employees.[105] Nova explained that the delay in the monthly wages was due to change in its payment system and personnel management and accounting sections that had not been completed on time and that the summer bonus delay until October was a business necessity that required employee co-operation.[97] On 14 September 2007, Nova delayed wages to many of its teaching staff. Many teachers who had previously resigned never received salary payments from the month of July.[106]

The NAMBU Foreign Workers Caucus in Tokyo estimated that up to 3,000 had not received their salaries on time. According to the Sydney Morning Herald, some teachers said they were owed "thousands of dollars" and others posted messages expressing the intent to quit. Sahashi issued a statement saying it had not been possible to complete all the necessary operations to deposit instructor salaries.[107] As a result of Nova delaying the payment of salaries, the Sankei Shimbun reported that insecurity spread amongst both staff and students surrounding the possible closures of Nova branches. On 20 September one teacher who demonstrated outside of Nova's office in Osaka was quoted as saying "I've already heard about the possible closures of 200 to 300 branches across the country. Nova no longer has the ability to pay the salaries of teachers and staff."[108] By 25 September the cash flow problems had not improved and Sahashi mortgaged 9 million shares of company stock (which included 1.18 million of his own personal shares) for the purposes of raising working capital. Nova Corporation said that they were not involved in planning the transaction.[109] A fax sent to branches after 9 pm on Friday 12 October informed all instructors that salaries would not be met on 15 October as scheduled.[110] The fax promised a solution for 19 October, the day Nova was required to submit its new business plan to JASDAQ after its previous plan was rejected by the Securities Exchange on 5 October for being insufficient.[111]

When salaries were not disbursed on 15 October, union representatives from both Tokyo based NAMBU Foreign Workers Caucus and the Osaka-based General Union approached the Labor Standards Inspection Office to file a report and request an inquest in unpaid wages. The Unions estimated that about 4,000 foreign teachers to salary went unpaid of which about 2,000 employees were still awaiting wages from the previous month that had been delayed since 27 September. The Unions also filed complaints reporting that Nova had withheld member's rent payment and the landlords had tried ask teachers to leave repeatedly.[112]

By 20 October there had been both union organized and wildcat strikes over the unpaid wages. The numerous delays of wages also led individual teachers also to boycott classes.[113] On 23 October, the Osaka Labor Standards office accepted a demand by Nova instructors to investigate criminal charges against Sahashi over delayed and unpaid wages.[114]

One example of the employment fallout after the collapse was the experience of small private school in Higashinari Ward of Osaka, which said 400 people applied in October for a single job opening. The collapse caught some former teachers in such dire financial straits that they had to rely on their former students to feed them.[115]

Sahashi's removal

On 26 October 2007, Nova's stock was delisted and all branches closed, following an emergency board meeting that removed Sahashi from his position as head of the company.[116][117]

In June 2008, after a volunteer questioning with Osaka Prefectural Police, a warrant was served and Sahashi was arrested on charges of embezzlement. Sahashi denied charges of wrongdoing and insisted that the 320 million yen reserve fund personally created through a firm affiliated with Nova effectively under Sahashi's control had been set up to refund tuition fees to students who had canceled their lessons.[118]

Nonpayment of employee housing rent

Foreign staff risked losing company-sponsored housing after Nova stopped paying their rent, which they did well before the official announcements of impending bankruptcy. Paul Dorey, an official of the General Union, said: "Some teachers have already received eviction notices. It’s a total mess."[119]

Lawsuits

The parents of a Nova employee who committed suicide in 2004 filed a suit against the company on 31 August 2007. Their son, age 28 at the time, was employed by Nova to design and supervise the construction of new classrooms. During that period Nova was engaged in a rapid expansion meant to increase the number of Nova branches by 300 in an attempt to reach a total of 1,000. The parents' suit alleges that their son was required by Nova to work up to 80 hours of overtime in one month, and even through the night on seven occasions, despite his inexperience. At one point he had requested to be relieved but was persuaded to stay, which eventually led to overwhelming stress shortly before his suicide.[120]

On 3 September 2007, an Osaka woman filed suit against Nova over a refund related issue. Unlike previous complaints about how Nova adjusted the value of unused lesson points on which the Supreme Court ruled in June 2007, this suit contested Nova's decision not to refund lesson points that were extended after the woman purchased additional points.[121] The woman claims that while Nova explained that her unused points (worth approximately 400,000 yen) from the first contract would carry over after signing a new contract, she was not told that they could not be refunded if she chose to cancel.[122]

In October 2008, approximately a year after the collapse, 24 former students filed a class action lawsuit against accounting firms KPMG AZSA & Co, former Nova president Sahashi, and five of the directors of the company claiming that the rapid expansion was pursued in a reckless manner, and that upfront lesson fees were being misappropriated.[123] The suit further claims that Sahashi and his directors were negligent in their duties to fulfill obligations to customers. It also accuses five directors and two accounting firms of participating in the bankruptcy of Nova by allowing it to continue to use illicit accounting practices. Those accused allegedly inflated profit reports by recording 45% of the paid-in-advance tuition fees as part of its sales. The suit seeks a total of 16 million yen in compensation.[124] [125]

Lindsay Ann Hawker murder

On 27 March 2007, the body of Lindsay Ann Hawker, a 22-year-old Nova teacher from Brandon near Coventry, was found in a sand-filled bathtub on the balcony of an apartment in Ichikawa, Chiba. Police say the suspect is 28-year-old Tatsuya Ichihashi. Police went to Ichihashi's apartment after Lindsay's flatmates had indicated she had gone there to teach an English lesson, but the suspect managed to escape. He was captured in Osaka on 10 November 2009.[126]

References

  1. 1 2 "Consolidated Financials". Jasdaq Interim and Consolidated Performance Figures. JASDAQ Securities. 2007. Retrieved 5 June 2007.
  2. ↑ "Nova Market Share". Japan Ministry of Economy via Nova Corp Website. 2002–2003. Archived from the original on 23 August 2008. Retrieved 21 March 2007.
  3. 1 2 "Stranded foreign teachers left penniless after Nova's fall". METI. 31 October 2007. Archived from the original on 31 October 2007. Retrieved 31 October 2007.
  4. ↑ "METI Report on Nova" (PDF). METI. 13 June 2007. Retrieved 29 September 2007.
  5. ↑ Retooled English school chains set to launch Nova x Geos brand http://www.yomiuri.co.jp/dy/business/T101014003658.htm Retrieved October 16, 2010
  6. 1 2 "Jibun Mirai website". Retrieved 6 June 2012.
  7. ↑ Japan Times Nova reinstated as name of English-language school chain September 4, 2013
  8. 1 2 "スクール検索". Retrieved 2 January 2014.
  9. ↑ Japan Times Six years following bankruptcy, Nova boosts the brand November 3, 2013
  10. 1 2 3 4 "Nova Corporate profile". nova.ne.jp. 2002–2003. Archived from the original on 4 November 2007. Retrieved 21 March 2007.
  11. 1 2 "New Nova hours pose health risk". The Japan Times. 31 May 2005. Retrieved 4 June 2007.
  12. 1 2 "Notice from Nova regarding news reports". Nova Web Site. 31 January 2007. Retrieved 29 March 2007.
  13. 1 2 "English schools face huge insurance probe". The Japan Times. 12 April 2005. Retrieved 20 March 2007.
  14. ↑ "Ministry of Foreign Affairs of Japan". Ministry of Foreign Affairs of Japan. Retrieved 5 June 2007.
  15. ↑ "Nova – Restrictions Inevitable". Yomiuri Shimbun. 14 June 2007. Archived from the original on 3 July 2007. Retrieved 3 July 2007.
  16. ↑ Media Critical of Nova in Wake of Public Stock Offering
  17. ↑ "Union, management speak two tongues" The Japan Times (31 January 1997)
  18. ↑ "Nova is accused of lying in stock-listing prospectus" The Japan Times, 19 December 1996
  19. ↑ "Nova Corp. Website" (PDF). Nova. Archived from the original (PDF) on 13 August 2007. Retrieved 15 August 2007.
  20. ↑ "Executives of scandal-tainted companies bow in remorse at shareholder meetings". Mainichi. 28 June 2007. Retrieved 12 August 2007.
  21. 1 2 "Services: Nova Corp. eyes capital tie-up". Asahi Shimbun. 18 June 2007. Archived from the original on 12 August 2007. Retrieved 17 August 2007.
  22. ↑ "Nova considers closing 200 classrooms". Asahi Shimbun. 20 September 2007. Archived from the original on 20 September 2007. Retrieved 20 September 2007.
  23. 1 2 "Gov't reluctant to get involved in bailing out Nova". Kyodo News. 27 October 2007. Archived from the original on 29 October 2007. Retrieved 29 October 2007.
  24. 1 2 "Nova granted court protection from creditors; president missing". Kyodo News. 26 October 2007. Archived from the original on 30 October 2007. Retrieved 30 October 2007.
  25. ↑ "Australian, British embassies assisting Nova instructors; Qantas offers cheaper fares home". Kyodo News. 28 October 2007. Archived from the original on 28 October 2007. Retrieved 27 October 2007.
  26. ↑ "EF invites Nova instructors to teach in China for Olympics". Kyodo News. 8 November 2007. Archived from the original on 14 November 2007. Retrieved 8 November 2007.
  27. ↑ "12 companies apply for sponsorship to rebuild Nova". Kyodo News. 5 November 2007. Archived from the original on 5 November 2007. Retrieved 5 November 2007.
  28. ↑ "Nagoya-based G.communication to take over part of Nova operations". Kyodo News. 7 November 2007. Archived from the original on 16 November 2007. Retrieved 6 November 2007.
  29. ↑ "G.communication to reopen 1st Nova school in Nagoya". Kyodo News. 11 November 2007. Archived from the original on 12 November 2007. Retrieved 12 November 2007.
  30. ↑ Geos, Nova English schools change ownership once again http://www.yomiuri.co.jp/dy/business/T101005004522.htm Retrieved 16 October 2010
  31. ↑ "ハワイ校". Retrieved 23 May 2012.
  32. ↑ "How U.S. stars sell Japan to the Japanese". Salon.com. 29 June 2000. Retrieved 30 June 2007.
  33. ↑ Philip Seargeant, Seargeant (2005). "More English than England itself": the simulation of authenticity in foreign language practice in Japan. International Journal of Applied Linguistics. pp. 326–345. doi:10.1111/j.1473-4192.2005.00094.x.
  34. 1 2 "Nova's abused bunny ad leaves activists hopping mad". Mainichi. 3 March 2003. Retrieved 15 August 2007.
  35. ↑ "Japan Market Research". Japan Market Intelligence. Archived from the original on 30 April 2007. Retrieved 15 August 2007.
  36. ↑ "Exploiting the zeal of Japanese to learn English". Asahi Shimbun. 16 June 2007. Archived from the original on 1 July 2007. Retrieved 1 July 2007.
  37. ↑ "Nova Corp. Website". Nova. Archived from the original on 10 June 2007. Retrieved 15 August 2007.
  38. ↑ "Nova students say they are learning how to watch their money disappear". Asahi Shimbun, reprinted with permission Nova Union website. 1 February 1997. Archived from the original on 13 August 2007. Retrieved 12 August 2007.
  39. ↑ "Nova to refund 3.8 million yen for students' unused lessons" The Japan Times 13 June 1997. Reprinted with permission by Nova Union. Retrieved on 11 February 2007
  40. ↑ "Glova Website". Glova. 6 June 2007. Retrieved 7 February 2007.
  41. ↑ Graham, Jeffery; Hideaki Miyajima; Javed Maswood (2002). Japan – Change and Continuity. Routledge. p. 119. ISBN 0-7007-1644-0.
  42. ↑ "Sizing up China: Language students put their money where their mouths are". Asahi Shimbun. 16 June 2007. Archived from the original on 12 August 2007. Retrieved 21 August 2007.
  43. ↑ Jibun Mirai Associe webpage Working Conditions Retrieved on 11 June 2012
  44. 1 2 "Nova teachers seeking legal help". The Japan Times, Reprinted with permission by Nova Union. 1 October 1994. Archived from the original on 27 July 2007. Retrieved 11 February 2007.
  45. ↑ "Nova teachers pan drug test: staffers urge school to end 'illegal labor practices'" The Japan Times 1994 Reprinted with permission by Nova Union. Retrieved on 11 February 2007
  46. ↑ Letter of Recommendation Osaka Bar Association. Retrieved on 20 March 2007
  47. ↑ "Our Accomplishments" Nova Union of Teachers. Retrieved on 11 February 2007
  48. ↑ "7 Nova teachers arrested for possessing cannabis, cocaine". Mainichi Shimbun. 31 January 2007. Retrieved 31 January 2007.
  49. ↑ Nova's ban on dating violates rights: teachers The Japan Times (1 March 2003) retrieved 1 July 2007
  50. ↑ Nova, let teachers date students: bar The Japan Times (26 February 2004). Retrieved on 1 July 2007
  51. ↑ No sex please, you're teachers: Nova teachers unhappy with rules, reports The Japan Times (1 June 2004). Retrieved on 22 March 2007
  52. ↑ Nova to pay teacher over demotion The Japan Times(11 December 2005). Retrieved on 1 July 2007
  53. 1 2 3 "Hard lessons in broken English". Sydney Morning Herald. 15 March 2006. Retrieved 21 August 2007.
  54. ↑ "Class Action". Japan Times. 23 November 2004. Retrieved 21 August 2007.
  55. ↑ "Times get tough for teachers". Japan Times. 28 March 2006. Retrieved 21 August 2007.
  56. ↑ Fukuoka General Union website Nova issues Retrieved on 1 June 2012
  57. ↑ General Union website Retrieved on 1 June 2012
  58. ↑ General Union website General Union Affiliation Retrieved on 1 June 2012
  59. ↑ "Nova teachers pan drug test: staffers urge school to end 'illegal labor practices'" The Japan Times 1994 Reprinted with permission by Nova Union. Retrieved on 11 February 2007
  60. ↑ General Union website Nova Branch History
  61. ↑ Letter of Recommendation Osaka Bar Association. Retrieved on 20 March 2007
  62. ↑ "Our Accomplishments" Nova Union of Teachers. Retrieved on 11 February 2007
  63. ↑ General Union General Union forces re-investigation into ex-NOVA president, Sahashi May 12, 2009
  64. ↑ General Union Union members win back allowances at NOVA July 12th, 2011
  65. ↑ General Union ノヴァ英会話/#自分未来アソシエ 障がい者の解雇をやめろ! Nova: Stop firing disabled workers! August 16, 2013
  66. ↑ General Union Twitter August 20, 2013
  67. ↑ General Union Union wins job back for fired disabled Nova teacher August 30, 2013
  68. ↑ "Inspection over frequent cancellation problems at Nova". ZakZak. 16 February 2007. Archived from the original on 3 August 2007. Retrieved 13 August 2007.
  69. ↑ "Nova raided after complaints over missing tuition fees" Mainichi Daily News 16 February 2007. Retrieved on 21 February 2007
  70. ↑ "Nova probed over refunds, deception" The Japan Times 17 February 2007. Retrieved on 21 February 2007
  71. 1 2 "Nova searched in contract row" The Asahi Shimbun 17 February 2007. Retrieved on 21 February 2007
  72. ↑ "Students at 'McEnglish' schools taste the spit in the burger" Weekly Playboy 21 March 2007. Retrieved on 5 June 2007
  73. ↑ "Nova President "No need to stop selling because of insufficient teachers"". Asahi Shimbun. 16 June 2007. Archived from the original on 17 August 2007. Retrieved 16 June 2007.
  74. ↑ "Students, ex-staff critical of Nova". Yomiuri Shimbun. 15 June 2007. Archived from the original on 1 July 2007. Retrieved 1 July 2007.
  75. 1 2 3 Ministry to order Nova to halt part of its operations The Asahi Shimbun 13 June 2007. Retrieved on 1 June 2007
  76. ↑ "Nova ordered to repay English tuition fees to man who cancelled contract". Mainichi Shimbun. 3 April 2007. Retrieved 12 August 2007.
  77. 1 2 LDP lawmaker vouched for Nova The Asahi Shimbun 13 June 2007. Retrieved on 13 June 2007
  78. ↑ "Top court: Nova's refund tactic illegal" The Asahi Shimbun 4 April 2007. Retrieved on 7 June 2007
  79. ↑ "Nova's policy on cancellations illegal: top court" The Japan Times 4 April 2007. Retrieved 7 June 2007
  80. ↑ "Ministry to clear up rules on refunds". Asahi Shimbun. 14 April 2007. Archived from the original on 12 August 2007. Retrieved 16 August 2007.
  81. ↑ "Tokyo: Amari admits visit over Nova inquiry". Asahi Shimbun. 23 June 2007. Archived from the original on 1 July 2007. Retrieved 21 August 2007.
  82. ↑ "Rule-breaking Nova hit with suspension order". Asahi Shimbun. 14 June 2007. Archived from the original on 1 July 2007. Retrieved 1 July 2007.
  83. 1 2 "Nova barred from making long contracts". Yomiuri Shimbun. 14 June 2007. Archived from the original on 1 July 2007. Retrieved 1 July 2007.
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  85. 1 2 Nova eyes new share issuance to dispel market concerns after gov't terminates subsidies Kyodo News via Japan Today (16 June 2007) Retrieved on 16 June 2007.
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  87. ↑ "Nova Improvement plan lacks details". Asahi Shimbun. 13 June 2007. Archived from the original on 17 August 2007. Retrieved 16 August 2007.
  88. 1 2 3 Nova boss weighs assistance options The Daily Yomiuri (16 June 2007). Retrieved on 16 June 2007.
  89. ↑ Travel agency H.I.S. eyes alliance with struggling Nova The Asahi Shimbun (3 July 2007). Retrieved on 9 July 2007
  90. ↑ H.I.S. may come to Nova's aid The Japan Times (3 July 2007) Retrieved 9 July 2007
  91. ↑ "H.I.S. mulls assisting scandal-hit Nova's turnaround efforts". Kyodo News. 6 July 2007. Archived from the original on 4 July 2007. Retrieved 21 August 2007.
  92. ↑ Benesse considers support for Nova Nikkan Sports (12 July 2007) Retrieved 12 August 2007
  93. ↑ Benesse Chairman: No synergy with Nova Nikkei Business Daily (12 July 2007). Retrieved on 12 August 2007
  94. 1 2 3 "Nova president refuses to resign". JASDAQ. 29 June 2007. Archived from the original on 1 July 2007. Retrieved 21 August 2007.
  95. ↑ Shareholders meetings reach peak / Nova, Katokichi, Kajima among scandal-hit firms grilled by investors The Yomiuri Shimbun (29 June 2007) Retrieved 12 August 2007
  96. ↑ "Stock Issue Announcement" (PDF). JASDAQ. 14 August 2007. Retrieved 21 August 2007.
  97. 1 2 "Unpaid salary showing a predicament for Nova management?". Iza News. 1 August 2007. Retrieved 16 August 2007.
  98. ↑ "The end of the road for Nova's business practices as cash flow crunch intensifies". Toyo Keizai (Toyo Economics). 21 August 2007. Retrieved 21 August 2007.
  99. 1 2 "Nova shares fall after poor performance in 1st quarter". Asahi Shimbun. 27 August 2007. Archived from the original on 29 August 2007. Retrieved 29 August 2007.
  100. ↑ "Nova sees decrease in students and 4,300,000,000 yen loss in Q1.". Nikkei Market News. 27 August 2007. Retrieved 30 August 2007.
  101. ↑ "Nova down 4,300,000,000 yen loss in Q1, sees decrease in student enrollment.". Nikkei Market News. 25 August 2007. Retrieved 30 August 2007.
  102. ↑ "Nova requests consulting company return 8,000,000 stocks". Asahi Shimbun. 11 September 2007. Retrieved 11 September 2007.
  103. ↑ "BNP Parabas sells stock, has 0% stake in Nova". Jiji Press. 4 September 2007. Retrieved 6 September 2007.
  104. ↑ "Nova requests consulting їcompany to return 8,000,000 shares". Sankei Shimbun. 12 September 2007. Retrieved 12 September 2007.
  105. ↑ "Nova explains a 'system trouble' causing delays of wages". Sutra newspapers via Yahoo Japan. 2 August 2007. Archived from the original on 16 August 2007. Retrieved 16 August 2007.
  106. ↑ "Unions want Nova, president indicted over payroll delays". Japan Times. 17 October 2007.
  107. ↑ "Teachers unpaid as company falters". Sydney Morning Herald. 19 September 2007. Retrieved 19 September 2007.
  108. ↑ "Nova closures spread insecurity among staff and students". Sankei Shimbun. 20 September 2007. Retrieved 20 September 2007.
  109. ↑ "Nova financing via 9 million share mortgage?". Sponichi Annex News. 25 September 2007. Archived from the original on 25 September 2007. Retrieved 25 September 2007.
  110. ↑ "No Pay For Nova Teachers on October 15th". Japan Probe. 14 October 2007. Retrieved 16 October 2007.
  111. ↑ "Jasdaq rejects NOVA report on improvement measures". Mainichi Daily News. 24 October 2007. Archived from the original on 10 October 2007. Retrieved 16 October 2007.
  112. ↑ "NOVA unions consider effect of bankruptcy". Asahi Shinbun. 17 October 2007. Archived from the original on 18 October 2007. Retrieved 16 October 2007.
  113. ↑ "Foreign teachers striking at Nova". Asahi Shinbun. 22 October 2007. Archived from the original on 22 October 2007. Retrieved 21 October 2007.
  114. ↑ "Labor standards office questions Nova staff". Mainichi Daily News. 24 October 2007. Archived from the original on 23 October 2007. Retrieved 24 October 2007.
  115. ↑ "Cover Story: Nova fallout". Mainichi Daily News. 8 November 2007. Archived from the original on 16 November 2007. Retrieved 8 November 2007.
  116. ↑ Coup d'etat: Sahashi Fired. Let's Japan.org (26 October 2007). Retrieved on 26 October 2007
  117. ↑ "NOVA files for Bankruptcy Protection". The Japan Times. 26 October 2007. Retrieved 27 October 2007.
  118. ↑ "Former Nova chief arrested – Sahashi grilled over misuse of ¥320 million in worker benefits". The Japan Times. 25 June 2008. Retrieved 30 July 2008.
  119. ↑ Soble, Jonathan (29 October 2007). "Nova hits Japan's English lessons". Financial Times. Retrieved 29 October 2007.
  120. ↑ "Parents seek recognition for their son's suicide". Mainichi Daily News. 1 September 2007. Archived from the original on 4 September 2007. Retrieved 1 September 2007.
  121. ↑ "Woman files suit against Nova seeking carryover point refund". Yomiuri Shimbun via Yahoo News. 3 September 2007. Archived from the original on 4 September 2007. Retrieved 4 September 2007.
  122. ↑ "Woman Takao, sues Nova for an 'unjustly low' refund". Asahi Shimbun. 3 September 2007. Archived from the original on 3 September 2007. Retrieved 3 September 2007.
  123. ↑ "Students sue Nova to get tuition back". Japan Times. 17 October 2008. Archived from the original on 18 October 2008. Retrieved 18 October 2008.
  124. ↑ "24 former Nova students seek 16 million yen in compensation in class action suit". Asahi Shimbun. 17 October 2008. Archived from the original on 18 October 2008. Retrieved 18 October 2008.
  125. ↑ "Former students sue ex-NOVA managers for unreturned tuition fees". Mainichi Daily News. 17 October 2008. Archived from the original on 22 October 2008. Retrieved 18 October 2008.
  126. ↑ Mainichi.jp Archived 12 November 2009 at the Wayback Machine.
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