¥100 BILLION IN LIABILITIES
The Osaka Central Labor Standards Supervision Office said Friday it questioned ex-Nova Corp. President Nozomu Sahashi this week on suspicion of breaking the law by failing to pay its employees.
It was meanwhile revealed that Nova would have liabilities in excess of assets totaling nearly ¥100 billion if the foreign-language school chain is liquidated, because the actual value of its assets is only about a 10th of book value, sources said.
According to the bankruptcy petition Nova filed Oct. 26 with the Osaka District Court to request protection from creditors and rehabilitation, liabilities exceeded assets by about ¥1.6 billion at the end of July, with assets totaling ¥42.3 billion and liabilities ¥43.9 billion.
But Nova’s actual negative net worth will hit at least ¥94 billion if the company is liquidated because its assets ? mainly textbooks, school equipment and other items ? would be worth only ¥4.2 billion after depreciation, the sources said, meaning its liabilities total somewhere in excess of ¥98 billion.
The liabilities would comprise some ¥70 billion worth of tuition to be reimbursed to students and loans from banks, the sources said.
That number may swell even further because it delayed paying rent for its schools and neglected to pay wages to instructors and other employees since August.
When the labor office quizzed Sahashi, 56, on Monday, he claimed Nova was unable to raise the funds needed to cover its payroll obligations because it was turned down for a loan request, sources at the office said.
Earlier reports, however, said Sahashi and his family had unloaded their majority stake in Nova and a controlling stake in Osaka videophone equipment supplier Ginganet Co., which allegedly gouged the chain’s students for their equipment. Nova shares went through wild price and volume fluctuations from late August to mid-September before it filed for protection in October.
The labor office had already confirmed in interviews that the wages of both Japanese and foreign employees were not paid since at least September. What it wants to know now is whether the company didn’t pay despite being able to. This will be key in deciding whether to pursue criminal charges against Sahashi and other Nova executives, they said.
The labor office had urged Sahashi to come in for questioning repeatedly before he disappeared from public view just before Nova’s Oct. 26 bankruptcy filing. The night before, Nova’s board of directors axed Sahashi in absentia. He couldn’t be contacted.
Nova began struggling with its finances after the Economy, Trade and Industry Ministry ordered it to partially suspend business in June for six months for lying to consumers about its services when soliciting students.
According to a labor union at Nova, salaries for regular employees were delayed for each of the three months since July, and the teachers have not been paid since September.
Nova failed to pay salaries for October and subsequently sought court protection.
If the unpaid wages cover two months, Nova will owe its workers a total of nearly ¥4 billion, according to a Nova administrator.
Nova quickly expanded with relatively low class fees and aggressive media publicity, and once boasted 480,000 students at its peak in 2005. It also had previous bouts of troubles, including lawsuits filed by students seeking reimbursements of fees that the company lost and subsequently had to pay.