Nearly 1,000 language instructors were left fearing for their jobs on Friday after Nova, the scandal-ridden owner of Japan's biggest chain of language schools, closed its doors and filed for court protection from creditors with debts totaling an estimated ?43.9 billion (US$384.2 million).
The firm, which has about 900 schools and 418,000 students, built its success on the back of advertising campaigns promising opportunities for "international exchange" at schools near railway stations staffed by native-speaker instructors.
But its troubles began earlier this year when Japan's supreme court ruled that it had acted illegally by refusing to refund students who had canceled their contracts.
PHOTO: AFP
In June the trade and economy ministry ordered Nova to close some of its schools after ruling that it had misled students in advertising campaigns.
The negative publicity led to a dramatic decline in enrolments and left the school unable to pay thousands of its teachers, some of whom also face eviction because Nova failed to pay their rent, which is deducted from their salaries.
Nova's 2,000 Japanese staff have not been paid since July and about 4,000 foreign instructors have not been paid since September.
One British employee, who works as a trainer, said she and her boyfriend, who will not be paid until next month in a new job, were living off the last of their savings and help from their parents.
"Rent and bills are getting difficult to pay," she said.
Another British couple she knows are facing eviction, she added.
The Osaka district court will try to find sponsors to rebuild Nova's business. Trading in Nova shares was suspended on the JASDAQ securities exchange in Tokyo, with the shares to be delisted next month.
The General Union, which represents many Nova employees, said the school's troubles had reached crisis point.
"This is a serious development that could force many students, instructors and employees to suffer losses," the union's chairman, Katsuji Yamahara, said.
The British embassy in Tokyo has set up an advice page on its Web site.
It is putting British teachers in touch with a travel agency that has agreed to provide cheap flights to the UK.
"We are doing everything we can in terms of consular support and advice but the one thing we can't do is provide direct financial assistance," a spokesman told the Guardian.
Nova president Nozomi Sahashi was fired at an emergency board meeting on Thursday for his "opaque way of fundraising and negotiating with potential business partners," the company said.
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