Missing president dismissed in absentia
Nova Corp., Japan’s largest language school chain, filed for bankruptcy Friday with estimated debts of about ?43.9 billion as it failed to recover from a crippling penalty for false advertising.
Osaka-based Nova said it applied for protection from creditors under the Corporate Rehabilitation Law with the Osaka District Court, and pledged to find a sponsor for rehabilitation under the supervision of a court-appointed administrator. The court accepted the application.
The Jasdaq Securities Exchange said Nova’s stock has been suspended from trading and will be delisted on Nov. 27.
The company, offering mainly English conversation classes to an estimated 420,000 students nationwide, said it has shut down all its schools, and Nova President Nozomu Sahashi, who has a 16 percent stake in the company, is nowhere to be found.
The company said Sahashi was dismissed as president during an emergency board meeting held without his presence late Thursday night because he failed to adequately explain his “opaque way of fundraising and negotiating with potential business alliance partners.”
The board then appointed Shoichi Watanabe, Hitomi Yoshizato and Anders Lundqvist as new directors with the right to jointly represent the company. Sahashi and Lundqvist founded Nova in 1981.
The decision to file for bankruptcy was also made at the meeting, the company said.
Nova’s decision to seek court protection came just as Nova employees and the Osaka Central Labor Standards Supervision Office were turning up the heat over workers’ unpaid salaries.
The company has failed to pay about 2,000 Japanese employees since July and about 4,000 non-Japanese instructors since September, according to a union representing non-Japanese teachers employed by Nova.
Nova was already coming off of two consecutive years of net losses when its final spiral began earlier this year. Customers complained that the chain was running misleading ads about its services. Nova was also facing numerous lawsuits from students who wanted fuller refunds from canceled lesson contracts.
The crippling blow came in June, when the Ministry of Economy, Trade and Industry ordered Nova to partially suspend business because of false advertising. The penalty, which included a ban on long-term lesson contracts, caused student enrollment to plummet and sparked the closure of several schools. Paychecks began coming in late.
Nova was founded in 1981 and took off on a rapid expansion in the 1990s. It grew by offering cheaper lesson fees than rivals and launching aggressive marketing campaigns that spread to TV in the 1990s. After enrollment rose from 320,000 in business 2001 to 480,000 in 2005, it commanded as much as 47.0 percent of the English-language school market.