The takeover of Nova

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, Co., a wholly owned subsidiary of the G.communication group, will take over 30 of about 670 Nova branches., 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 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.