The largest buxiban in Japan called Nova Corp closed its doors on Friday as they sought protection from creditors. Nova employs 7000 people including 4000 foreigners who are all out of a job.
Many have not been paid for several months and are worrying about their visa status. 900 Australians are out of jobs and some will use reduced airfare by Qantas to go home.
Nova has not posted a profit in two years and is over 43.9 billion yen in debt (500 million USD). Things really started to go bad for Nova back in June, when the government barred them from offering long term contracts at discount rates to new students. They also limited the number of hours that the new students could attend. Analysts say that an ill conceived rapid expansion across Japan backed by a massive advertising campaign is one of the main reasons behind the collapse. Nova failed to recruit enough experienced teachers and students defected to rival schools after complaining about the quality of Nova’s courses.
900 Britons and 1300 Americans are also affected. Nova had 1000 branches and over 450000 students. Nova is known as the McDonald’s of language schools and recruits aggressively in British campuses.
The president of Nova can not be found. Read more about the legal and financial maneuvering and implications going on in Japan.
I only have about 2,800 yen (25 dollars) in my bank account right now,’ said Sam Gordon, an English instructor at Nova Corp. He has not received his pay for six-weeks – about 3,800 dollars – from the company.
The company’s debt accumulated to about 43.9 billion yen when students’ cancelled lessons after the Ministry of Economy, Trade and Industry ordered Nova to suspend some of its classes in June.
The ministry’s order came after determining that the company had falsely advertised its services to consumers by saying they could take lessons any time.
The scandal caused a rapid plunge in student enrollment. In the peak year of 2005, Nova had 480,000 students learning English, French, German, Spanish, Italian and Chinese at nationwide branches.
One teacher arrived in Tokyo two days ago and found out that there was no job waiting for him. Nova was still recruiting instructors overseas even amid financial troubles, Tench said.