Nova Corp.’s Sacked Chief In Hot Water

While 300,000 students are worrying about their prepaid tuition and 4,900 foreign teachers are waiting for unpaid wages, lawyers appointed to act as receivers for the bankrupt Nova Corp. recently discovered that Nozomu Sahashi, the former president, had secretly sold a 50%-plus stake in the ailing English-language school chain.

Japan’s biggest foreign language school, Nova Corp. said Tuesday the combined shareholdings of former President Sahashi and his Osaka-based family company fell sharply to 20.2% at the end of September from 70.6% as of the end of March, for unknown reasons. Nova said in a press release that, although the change in the stock holding was sudden and big, no details about it are available at the moment, according to Jiji Press.

If Sahashi is proved to have sold his shares without filing a report with the securities regulatory authority, the receivers will file a criminal complaint with law enforcement. In Japan, a major shareholder with a 5% stake or more in a listed company is required to disclose any share transaction within five business days.

More than 90% of the value of Nova shares has evaporated over the past year, and the stock will be delisted from Jasdaq on November 27.

Sahashi was removed from his post last Thursday after he failed to show up at a board meeting held at Nova’s Tokyo office. The other board members, after rejecting Sahashi’s last-minute request to change the meeting venue, sacked the president and immediately filed for court protection from creditors under Japan?s Corporate Rehabilitation Law.

The 56-year-old Sahashi has yet to appear to give his interpretation of the situation. His egoistic character and autocratic administration have been widely criticized as bringing about the collapse of Nova, leaving total liabilities of 43.9 billion yen and disrupting the lives of the school’s students and teachers.

Sahashi launched a tiny English-language school after returning from a sojourn in Paris in 1981. Thanks to the neglect of English-language education in traditional schools, Nova’s bright blue neon boxes quickly spread across the country, and the company became Japan’s biggest network of centers for learning English.

Yet, when the number of Nova schools reached 900, emergency signals began to light up. Consumer affairs offices across the country were busy with complaints filed by Nova’s students who received no instruction despite having prepaid for their lessons. Landlords? lawsuits against Nova over unpaid rent began to pile up. The authority instituted a six-month ban in June, prohibiting Nova from signing new contracts with customers of more than one year or more than 70 hours of instruction, as a penalty for giving false claims about its lessons to prospective students, which finally pushed the ailing education concern to the brink of bankruptcy.

Nova seemed to have found a white knight in May, when its board was in talks with leading retailer Marui for a business tie-up. Nevertheless, Sahashi walked away from the discussion table during the final stage of negotiations, as he was reportedly dissatisfied with the arrangement that he would have to give up his position as president. In turning down Marui’s 6.6 billion yen ($57.71 million) capital injection, he left his foreign teaching corps in despair.

The foreign instructors have yet to receive any paychecks since September. Some of these, who are mostly young graduates seeking to experience life in Japan, have even been evicted from apartments provided by Nova. The Osaka Labor Bureau announced on Monday it would ask Nova’s receivers to confirm the home addresses of those teachers who return to their home countries without receiving wages.

Since Friday, 76 foreign instructors from Nova have visited the Osaka Employment Service Center for consultations. The center also has received 127 telephone inquiries, mostly concerning the unpaid wages, according to Mainichi Daily News.

The Australian and British embassies in Japan have set up special units to assist their nationals. Australia’s national carrier, Qantas, is also prepared to offer discounts to Nova teachers looking to head back home.

http://www.forbes.com/markets/2007/10/30/nova-language-centers-markets-equity-cx_vk_1030markets03.html

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