IHT/Asahi and Metropolis: Two good articles on NOVA bankruptcy aftermath

Okay, yet another post under the wire…

Two good articles on the aftermath of the NOVA bankruptcy. One from the IHT/Asahi, the other from Metropolis Magazine by Ken Worsley of Trans Pacific Radio., including links to where people can get help. Arudou Debito in Sapporo

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Asahi Weekly
Cover Story: Nova fallout
IHT/Asahi: November 8, 2007
BY HIROSHI MATSUBARA, STAFF WRITER

http://www.asahi.com/english/Herald-asahi/TKY200711080113.html
Courtesy of Thom Simmons

With 4,000 Nova Corp. teachers out of work, now is probably the worst possible time to be seeking a job as an English instructor in Japan.

Picture Caption: A Nova Corp. teacher, left, who lost his job when the Osaka-based chain of English-language schools collapsed seeks job advice from a counselor at the Shinjuku Employment Assistance and Instruction Center for Foreigners in Tokyo last week.

The collapse of the Osaka-based chain of language schools means that hundreds of teachers now apply for every job opening, according to GaijinPot, a popular online job-site for foreign nationals in Japan.

Longtime Nova employees accuse the company of operating under a system that made quitting the company an unpalatable option.

They said Nova specialized in recruiting young, inexperienced university graduates with little or no practical Japanese-speaking ability.

That left many of them ill-prepared to find new jobs outside of, and to an extent, within the teaching industry–hence the current fierce competition for teaching positions.

Nova insiders say the company churned out teachers in much the same way that a fast-food chain produces hamburgers.

English Spot, a school in Higashinari Ward, Osaka, said 400 people applied in October for a single job opening that eventually went to a 26-year-old French national who gained her teaching credentials in Britain and had been working for Nova.

It noted that the vast number of applicants for the job the woman landed were former Nova teachers like her.

The woman said, “I am happy that the school chose me because I know that a lot of people at Nova are in trouble right now.”

Her application for the new job stood out because of her track record as a language teacher in Britain, where she taught French and Spanish at a secondary school, said Matt Kelley, owner and director of English Spot.

On Oct. 26, the day she started working at the school, Nova filed for financial reconstruction under court supervision.

G.communication group, a consulting firm based in Nagoya, will reopen at least 30 Nova schools and says it hopes to rehire the Nova staff.

As for Nova’s former president, Nozomu Sahashi, he looks set to face criminal charges shortly for failing to pay billions of yen in wages to his employees, sources said.

Some former Nova teachers are in such dire financial straits they are having to rely on their former students to feed them.

Since mid-September when Nova’s arrears of payment problems came under the light, the number of job-seekers who posted their resumes at the GaijinPot Web site has increased five-fold, often reaching more than 1,100 new applicants a day.

“As former Nova teachers jump into the ring for fewer English teaching jobs, some employers might develop an attitude that potential employees must be the cream of the crop, with very little enthusiasm in even spending time on interviewing less qualified candidates,” said Percy Humphrey, GaijinPot’s general manager.

At least 9,000 former and current employees of Nova have registered with the Web site, which offers only around 200 openings.

Since Nova applied for court protection last month, 330 former Nova teachers have visited a specially created counseling corner set up by the Tokyo metropolitan government-run Shinjuku Employment Assistance and Instruction Center for Foreigners.

Their concerns rarely differ: They want advice on unpaid wages, unemployment insurance and new job opportunities. In addition, 500 former Nova teachers have contacted the counselors by phone.

Naoto Moriizumi, a senior official of the Tokyo Labor Bureau in charge of the counseling corner, said the teachers usually arrived in Japan with a visa in “humanities and international services,” which allows them to work at jobs requiring fluency in foreign languages.

“Aside from teaching English, there aren’t many kinds of jobs to which they can apply without a certain fluency in Japanese,” he said. “Even other language schools now want candidates to have conversation-level Japanese, but unfortunately most Nova teachers have not obtained it.”

This description certainly fits Schevon Salmon, a 24-year-old American, who was recruited by Nova on the campus of a Florida college two years ago.

Last week, the resident of Tokyo’s Taito Ward visited the Shinjuku employment center only to discover he is not eligible for a dozen English-teaching jobs due to his limited proficiency in Japanese.

“It’s twice as hard to find jobs in other areas, because you do not have experience or enough familiarity with the language,” he said.

Referring to Tuesday’s moves to take over some Nova outlets, Salmon said: “That’s great news … but it does little to console the mass of teachers out there who need work.

“Isn’t this Japan where your company is like your family and you take care of your company because you know your company will take care of you?”

He said Nova owes him 250,000 yen in unpaid wages.

The bureau estimates that former Nova employees are still owed at least 1.5 billion yen.

Operators of small-sized schools, meantime, expect Nova’s collapse will prove to be a windfall in terms of getting new students.

“There’s no doubt the Nova debacle must have hurt the image of English schools in Japan as well as Japan’s image as a job market outside of Japan,” said Kelley of English Spot in Osaka.

“But Japanese people’s enthusiasm to learn English remains unchanged and now students are becoming more discerning in choosing schools,” he said.

“English schools have to get back to fundamentals that we are here to educate, not just to make profit,” he said. (IHT/Asahi: November 8, 2007)

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Bulletin
By Ken Worsley

The Decline and Fall of Nova
Japan’s largest employer of foreigners comes to an ignominious end
Metropolis Magazine November 9, 2007, Issue #711
http://metropolis.co.jp/tokyo/recent/bulletin.asp

“Any company that loses sight of the future and begins to think only of maintaining the status quo… well, that company is as good as finished.”—from Nova’s website

On Friday, October 26—while struggling to survive under a mountain of unpaid student refunds, strict government penalties, zero cashflow and an angry workforce—English language school operator Nova closed its doors and filed for bankruptcy protection after President Nozomu Sahashi was ousted in an emergency late-night board meeting.

The question on the minds of thousands of teachers, staff and students is whether those doors will ever open again. The answer may depend on whether or not the court-appointed bankruptcy lawyers are savvy enough to separate Nova from the man who ran it.

After the announcement that Nova was filing for protection, the court acted quickly, and by Friday afternoon had appointed two lawyers to act as trustees. Their task was to find a “sponsor” who would be willing to take over Nova’s operations and rehabilitate the firm. Hours later, four firms were named at a press conference: Department store operator Marui, retail giant Aeon, internet retailer Rakuten and Yahoo Japan.

Within a few days, however, Marui, Aeon and Rakuten stated they were not interested in the deal. Rakuten President Hiroshi Mikitani told reporters, “It’s honestly surprising that our name came up. I think it would be difficult for us to consider supporting Nova.” That left Yahoo Japan, which has yet to issue a public statement on the matter.

A few days later, the reasons why Marui was so turned off became clearer. The media reported that in May, Nova’s management was negotiating a deal in which Marui would provide Nova with ¥6.6 billion in cash in exchange for exclusive rights to collect on all loans taken out by Nova’s students. At the last minute, Sahashi walked out on the deal, saying he needed more time to think about it. He subsequently disappeared for a few days. Marui was not impressed.

That was apparently not the only time Sahashi scuttled a business deal that could have potentially helped Nova. Upper-level managers seem to have realized this a few months ago, and according to the Yomiuri Shimbun, have made five requests that Sahashi resign since mid-August.

The available evidence, as well as the media’s treatment of the story, have led many to believe that Sahashi is the single largest cause of Nova’s problems. Bankruptcy trustees have continued in their attempts to separate the man from the firm, bringing along members of the Japanese media to view the former president’s Osaka office. Boasting a suite, sauna and tatami room, the office apparently cost the company ¥60-¥70 million.

Much more egregious seem to be Sahashi’s stock transactions and flouting of the Securities and Exchange Law. When the firm applied for bankruptcy protection, it was reported by Kyodo News that Sahashi held about 20 percent of Nova’s shares. This was surprising, since Sahashi and Nova Kikaku, a firm run by one of his relatives, were publicly listed as holding an ownership stake of over 70 percent. Of course, Sahashi’s power was derived from that massive equity stake, and without it in the way, the other members of the board were able to force Sahashi out of his position.

Where did those shares go? The Mainichi Shimbun told us that by September 30, Sahashi and Nova Kikaku’s stake in Nova had declined to 16.02 percent and 3.69 percent, respectively. Yet Financial Services Agency regulations state that sale or purchase of greater than 5 percent of shares in a listed company must be reported within five days.

To make matters worse (for himself), on October 31 it came to light that Sahashi had been skimming money from Nova by selling video conference hardware at marked-up prices from Ginganet (a company of which he was virtually the sole operator) to Nova. Legal action against Sahashi is apparently being considered.

Finally, on the very day Nova petitioned for bankruptcy protection, Sahashi sold all of his shares in Ginganet and NTB (a travel agency he also ran) to an IP phone company in Tokyo. Nova’s court-appointed lawyers have expressed anger over this move, saying it should not have happened while the firm was entering bankruptcy protection.

In a sense, Sahashi has been playing into the hands of bankruptcy administrators who seek to pin the blame for Nova’s woes on him alone. His selfishness, petulance, disdain for employees and customers, and lack of business acumen make him an exceedingly worthy scapegoat. As this article was going to print, Sahashi remained incommunicado, and the bankruptcy administrators seem to be hoping that the worse he looks, the more the firm will appear as an innocent victim of his tyranny.

Will the strategy of separating Sahashi from the firm he wrecked succeed? Nova’s bankruptcy administrators claim that they have found a few firms interested in taking over the company’s operations, but this time they’re not naming names. Nova supposedly has until the second week of November to find a “sponsor,” or else it will be forced to go into a bankruptcy liquidation process.

This observer fears it may be too late. To paraphrase the quote from Nova’s website, Sahashi was the status quo, and sold the firm’s future to secure his exit. Whatever happens, Sahashi himself is as bad as finished.

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WHERE TO TURN
Questions regarding legal issues such as claiming unemployment insurance, getting back pay and how to deal with eviction are never pleasant. Mix that with being in a foreign land and sifting through the slew of information coming from all manners of sources, and things are bound to get downright confusing. Here are some resources that should be helpful in seeking answers to those questions. As always, try to verify information with a second source, and if something seems suspicious, that’s probably because it is.

Gaijin Pot (http://www.gaijinpot.com/nova.php) has put together a collection of resources divided into four categories: Jobs, Housing, Legal Issues and Flights. From there we learn that Sakura House (http://www.sakura-house.com/english/nova.php) is offering discounts to former Nova teachers and that Qantas Airlines (03-3593-7000) is offering discounted rates to Australia for former Nova teachers.

If you’re thinking about collecting unemployment insurance, or would like more information on finding a new job, Hello Work (the “Tokyo Employment Service Center for Foreigners”) is a good place to start. They have some resources available in English, and their website has a guide to offices with foreign language assistance. See http://www.tfemploy.go.jp/en/coun/cont_2.html.

A final source of information are the two websites of the General Union, which represents Nova workers. The main site (http://www.generalunion.org) has news, information and links to other resources. The Nambu Foreign Workers Caucus site (http://nambufwc.org/issues/shakai-hoken) has a bit more news on it, with information on upcoming meetings in the Tokyo area.

ENDS

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