English conversation school chain operator Nova Corp. has filed for court protection from creditors after running into financial trouble under its president, Nozomu Sahashi, who has since been sacked by the company’s other board members.
This is the first installment of a three-part series of articles taking an in-depth look at Nova’s collapse.
The three Nova Corp. directors had been waiting more than an hour for the company’s founder, Nozomu Sahashi, to show up for an extraordinary board meeting scheduled to begin at 9 p.m. at the firm’s Tokyo office Thursday, when Sahashi called one of their cell phones.
“I’m somewhere else now, I want to hold the board meeting here,” Sahashi said.
Shoichi Watanabe, Hitomi Yoshizato and Anders Lundqvist refused to comply with Sahashi’s request, and began the meeting on the 23rd floor of the Shinjuku NS Building in Shinjuku, Tokyo, without him.
Within about 10 minutes, the three board members had agreed to dismiss Sahashi as president and to file for court protection from creditors under the Corporate Rehabilitation Law.
The three had reasons for ignoring Sahashi’s request this time.
Two days earlier, Sahashi had chosen a Tokyo hotel lobby as the venue for an extraordinary board meeting.
At the meeting, Sahashi repeatedly told the directors, who were pressing him to make a decision regarding his resignation and on filing for legal liquidation of the company, that he could raise 3 billion yen by Thursday. As the other executives had to speak quietly to avoid attracting people’s attention, Sahashi insisted he wanted to put off a final decision until Thursday evening.
The directors are said to have felt if they had complied with Sahashi’s summons on the Thursday evening, they would once again be left following his lead.
This distrust was behind their “coup d’etat.”
The board members were close associates of Sahashi’s, and had gone through a great deal with him over the years. Lundqvist has been a partner of Sahashi’s since Nova was founded in 1981, and Yoshizato went to work with him as a part-time worker at the same time.
But despite their long history, the three board members are said to have rebelled because of what they saw as the egotistical actions of Sahashi and their feeling that the company had become a one-man show.
In a meeting held in late May in Tokyo, Nova’s management was in the final stages of discussions over a capital and business tie-up with leading retailer Marui Co.
In return for Marui giving Nova a 6.6 billion yen capital injection, Nova would have given Marui exclusive rights to issue all loans taken out by its students. The deal would have included conditions favorable to allowing the four board members, including Sahashi, to stay in their posts.
But moments before an agreement was reached, Sahashi, 56, without giving a reason, asked for a little more time to consider the deal and walked out of the meeting. He could not be found for the next three days.
Sahashi’s actions appalled Marui, which pulled the plug on discussions.
The former president’s interference reportedly put an end to several more plans for tie-ups prepared by the board members, creating a widening gulf between Sahashi and the board.
However, it was the firm’s area managers–executives in charge of groups of schools in each region–that sparked the board members’ uprising.
The area managers handed a written petition to Sahashi in person on Aug. 17 demanding his resignation, and calling for the company to ensure Japanese staff and foreign instructors were paid on time.
The petition contained phrases such as, “We want Sahashi to step down to restore our corporate image.”
The signatories also stated they would resign on Aug. 31 if Sahashi did not comply with their demands.
But even then, Sahashi is said to have offered little but excuses, making statements such as, “I’ll have some good news for you in September,” and “The company won’t go under if we honor our debts.”
The regional managers petitioned for Sahashi’s resignation on five occasions, convinced the firm could not be rebuilt with him at the helm.
The board members and other executives contacted lawyers, the Economy, Trade and Industry Ministry and Sumitomo Mitsui Banking Corp., Nova’s main bank, at the beginning of October to begin plans to oust Sahashi and to file for court protection.
Sahashi, an individualist who drove Nova to the top of the English conversation school market, is still in hiding.
“Ultimately, that man only ever thought of himself,” one of Sahashi’s aides commented.