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SuperNOVA: The bankruptcy and implosion of Japan’s largest language school chain


October 26 this year marked the one-year anniversary since Japan’s largest language school chain, and largest employer of foreigners in Japan, Nova, officially went belly-up, leaving 7,000-odd staff unemployed and hundreds of thousands of students severely out of pocket.

How a company with a 60 percent market share, over 400,000 students, 900 branches, and 25 years experience could collapse so spectacularly in a matter of months is a case-study in business mismanagement and greed. After not paying foreign instructors like me for two months, Japanese staff for 3 months, and illegally refusing to refund students for many more, company President Nozomu Sahashi – or “Monkey Bridge” as his name means in Japanese – was ousted in a coup by Nova’s Board of Directors.

The Board of Directors then filed for bankruptcy protection and de-listed Nova’s stock, and for all us still clinging to the sinking ship, the wait was finally over, no explanation given – or needed.

“I got an email on my phone the Friday morning from one of the Japanese staff telling me not to come into work,” says Robert Alack Junior III of Texas, a former Nova whipping boy, like me. “I went in anyway to see what was going-on and the branch was just locked with all the lights off. There were a couple of other instructors there too, and a few students were turning-up for their lessons, obviously wanting to know what was going-on, but we had no idea ourselves. We all knew the company was going under, but I was surprised at how fast it happened. I thought that being such a big company – it was Japan’s biggest of its kind – it could pull through somehow, or at least absorb its losses for longer, but it seemed like in a month or two, it was finished.” Indeed, Robert has worn shirts without washing them for longer.

The company’s demise had been visibly a few months in the making — little things like having no pens or paper in your branch, the doormats at every branch getting taken away by the rental company, or not getting paid on time — though its root causes went back many years, and were ultimately the result of a flawed and reckless business model. Nova had got into trouble with METI (Ministry of Trade, Economy and Industry) numerous times for sleazy business practices ranging from illegal student cancellation procedures to racist double-standards for foreign employees.

For example, the company got around having to enroll employees in shakai hoken (obligatory worker social insurance in Japan) by changing lesson times to 40 minutes, leaving two more paid minutes either side for planning and student evaluation, and six to eleven unpaid minutes (depending on the time of day) between classes. This meant, even on a fulltime schedule, we were paid for slightly under the minimum 30-hours required to be eligible for this basic labour standard. From a customer’s perspective, the caliber of many instructors perhaps left a little to be desired as well, most having no prior teaching experience and having only received two-and-a-half days training, which many of us seemed to spend pretty hung over.

My suspicions as to a possible lack of professionalism were initially aroused my very first night in Japan, when I went out drinking with a few of my new co-workers, one of whom was Nova’s equivalent of a branch manager, so effectively my boss. After about 20 minutes and a few tequila shots, he turned to me and, in a thick Australian accent, said, “Either you head butt me, or I’ll head butt you, mate!” Of course, I took those odds, and to be fair, Nova did afford one the “rich, cultural experience” that many of us working for the company were primarily looking for: namely, going-out drinking five nights a week and trying to bed as many Japanese broads as possible.

As most people who were employed by Nova will tell you, it was a pretty alright place to work when you were actually being paid. Having a co-worker pop up in the lesson booth next to me, behind the students’ backs wearing a tie and nothing else to try and throw me off, or being mooned by someone who was also technically my boss, while he simulated fellatio on an enormous fake cock as a “test of professionalism under pressure” all contributed to a convivial working atmosphere. The latter instructor is the same shining star who managed to climb the Nova ladder by conducting lessons like the following in an audible manner for the benefit of his co-workers, when he and his 14 year-old junior high school student with almost no English were doing a lesson about ordering fast food:

Instructor: “Would you like a milkshake? We have four flavours: chocolate, vanilla, strawberry and shit.”
Student: [No answer]
Instructor: “How about an ice cream? Would you like an ice cream?”
Student: “Yes”
Instructor: “Oh, I’m sorry, we’re out of ice cream, someone pissed in the ice cream machine.”

****

Despite these endemic acts of morbid misconduct, Nova still could have survived, and indeed even thrived as a company, if it were not for co-founder and President Monkey Bridge’s commitment to his ridiculous, egotistical policy of suicidal over-expansion. Having founded the company in 1981 and seen it grow astronomically, he apparently made the grandiose statement a few years back, “I’m going to open a thousand schools!” and then actually set-about doing so, despite having already over-stuffed a saturated and dwindling eikaiwa market.

The branch I worked at, Yukuhashi, was a perfect example: tucked-away in the corner of a shopping mall in a town that Japanese consider to be “very countryside”. It was four stops down the train line one way from another Nova school, and three stops up the other way from yet another Nova school, with several other eikaiwas in the area in much better locations. In an eight-lesson day, it wasn’t uncommon to have four or five lessons free in which to sit around with another instructor and two Japanese staff being paid to do nothing as the branch hemorrhaged overheads while cannibalizing customers from the two branches surrounding it. This, of course, afforded one ample time to catch up on sleep, or for co-workers to hide your shoes leaving you a series of 20-odd clues to decipher in order to find them (they were in the fridge), but from a business perspective it was absurd.

The first time our pay was late it was only by 12-hours, and no one thought anything of it, a Nova fax explaining it away as a computer banking error. Then Japanese staff were paid late by a matter of weeks, but most instructors rationalized that with the fact that being Japanese the company knew they would be prepared to take unlimited abuse and still turn-up for work (which was true), so Nova would never try that with us. We received our salary for each month on the 15th of the next month, and on September 15th our wages for August didn’t arrive at all. We were told we’d get our money in a few days, but a few days came and went with no money, only a bullshit fax on the 21st of September from the mighty president Himself telling us to “hang in there!”, and that “the dark clouds that have been hanging over us [would] soon be cast aside.” Eventually, we got August’s money, but that was the last paycheck we ever got. When October 15th came and went with no money, we got more bullshit faxes, but, unfortunately, “the first of light of dawn,” mentioned in one of his faxes, which, according to Sahashi, came after the darkest time and could now “finally be seen,” was only the light shining from his ass.

Nova’s business model operated on paying for each month with the amount of new lesson packages sold in the preceding month. When demand for English lessons began to decline, its survival became precarious. When the Japanese Ministry of Education, Trade and Industry (METI) slapped a six-month ban on selling new long term contracts as punishment for its cancellation criminalities, the company was finished, and everyone in the Nova hierarchy, with the exception of the delusional President, knew it was just a matter of time until it went bankrupt.

Despite this knowledge however, not only did Nova continue to sign-up new students on short-term contracts and string instructors along with bullshit faxes and misinformation, they actively recruited new instructors from overseas, knowing full well that they would soon be stranded in Japan with no income!

Jason Cornish from Seattle was one these unfortunate chumps. He interviewed for Nova in September, and being sober at the time, easily got the job. The first thing he saw when he arrived at his final destination, Kokura station, was Kurosaki branch AT, Joi Wong, sitting on the shinkansen platform in shorts and a t-shirt holding a crudely-drawn sign on A4 paper baring Jason’s name.

As Jason remembers, “This guy comes up to me and says, ‘You Jason? Nice to meet you. Sorry about my casual appearance, but the bastards you’re about to work for were supposed to pay me two weeks ago and haven’t, so I’m on strike today.’ This was the very first thing I heard when I arrived in the city!”

Joi, of course, was nice enough to meet Jason at the station despite being on strike, and after a brief explanation of events, told him, “If you want I can take you to your apartment now, or I can take you around the city to other English schools to apply for a job… I highly recommend the latter option.”

“So here I am in a new country, not even speaking the language,” says Jason, “and the first person I met, representing the company I’m supposed to be working for, is telling me I should find a new job!”

Jason says when he interviewed for Nova “they didn’t tell me what was going-on, I got told there was a problem with some instructors in some areas not being paid on time, so I was like, ‘Well that doesn’t matter to me’, and I didn’t think much of it. I was pretty much completely mislead.”

So Jason, a reject from his own country with a simple dream of living like a God among the Japanese, never got any salary, and found himself unemployed just three weeks after he got there. He was thrown in the middle of trying times indeed, but looking back, most of us seemed to handle it pretty well. Pretty much everyone in my area still kept going into work in October on an essentially voluntary basis mainly to avoid the possibility of being “fired” from the dying Nova, which many thought would have potentially jeopardized getting our unpaid wages back from the government. I heard a lot of people in other areas weren’t so lame, some staff down in Okinawa for example, I heard, raided their branches for anything valuable a week or two before it canned, and went to the beach.

Instructors that had been careful enough fell back on their savings. Others, like myself, who had squandered theirs had to use their credit cards, hit up their family for money, and/or look for another job. Food became a little scarce at times, the Nova union in Osaka even organizing a “lessons-for-food” scheme.

****

Nova’s demise was widely publicized in countries where a lot of instructors came from, with Qantas and British Airways even offering those affected heavily subsidized return tickets home. Being such big news in Japan, most people were aware of our situation, and we got a lot of charitable offers. The eccentric owner of a local yakitori shop, for example, offered me numerous free meals and beers (however, as I soon realized, it was only because the perverted old man liked my girlfriend at the time).

While everyone I can think of in my area did alright for accommodation, many instructors around the country were kicked-out of their Nova apartments because, despite deducting the (already grossly overpriced) cost of rent from its employee’s salaries, Nova had not paid their rent, in some cases for months.

A friend of mine, Leeann Hubrecht, who was working in Miyazaki, says the day Nova filed for bankruptcy protection her cold-as-ice landlord knocked on her door told her she had three days to beat it before she changed the locks. I, on the other hand, was fortunate enough to have moved into private accommodation the month before, and raided my apartment for all it was worth, entirely decking-out my new place with free furniture, courtesy of Nova. Despite also taking money for our medical insurance, Nova wasn’t paying that either, so we were all left totally uncovered, and apparently had been for a few months.

As I mentioned above, we had been expecting the bankruptcy for a while, but in KitaKyushu anyway, a wait-and-see approach pervaded. Most of us were younger kids that never planned to stay in Japan for long anyway, so it didn’t really hurt too much to stay put and see what happened, but I was surprised at the continued trust most of my co-workers seemed to put in authority.

This was to be expected from the Japanese staff of course, but most foreign instructors, too, seemed ready to follow institutions again -– be it the government or the bankruptcy trustees -– and do what they were told, despite having been so consistently lied to. The televised conference about the corporate takeover in November 2007 was a classic example. We were told we were supposed to turn-up in suits, and I was like, “Fuck that! Pay me and you can tell me what to wear!”, but sure enough, everyone else, except one other guy, dutifully turned-up suited and booted.

My “fuck-you-I-won’t-do-what-you-tell-me” attitude turned-out to be a stupid move, however. We really would have been smartest going with the herd – from a financial perspective anyway (which is obviously what it was all about). At the meeting regarding the buy-out (though the “buy-out” can be more accurately described as vultures picking over a carcass) we were given the option to either sign-up to the new company, G.communications Ltd., or stay with the bankruptcy-protected Nova until it officially went bankrupt some time in the future (potentially years). As Nova’s useless trustees, charged with finding a corporate sponsor, had promised us they would find a company who guaranteed instructors’ back-salaries and would at least partially refund lost student contracts, revealed at said meeting that our savior, G.com (who currently run Nova) were going to do neither, I refused to sign their broke forms at all.

I ended-up doing myself out of ¥150,000 though by not signing up to the new company (which was everyone else did). Some took Option B which was to go on stand-by and take 60 percent salary until they were offered a position some time in the future, as opposed to Option A: start work immediately; these people were given ¥150,000 to tide them over. This money was essentially a parting-gift however, as G.com surely expected most of the instructors to take this money and bounce. My clinging on to the carcass meant I was still technically a Nova employee, on 60% pay, until official bankruptcy was declared, even when I went home to New Zealand for a few months, and this was included in my back salary from the government. Eventually, most of the Option B peeps that stayed, having been categorically promised future employment with G.com, were done away with in a few months anyway, the new company citing less than anticipated customer interest as the reason.

Nova’s long suffering foreign management staff got it even slightly worse, as they helped get G-Communications-Nova up and running and were then done away with when no-longer needed. KitaKyushu’s former Assistant Area Manager, Rohan Smith, who had worked for Nova for about 10 years, was summonsed to a meeting in neighbouring Fukuoka city after a few months of working for G.Com.

Unbeknown to him and the other managers — because they were supposedly informed by an email that was never sent to them — their positions no longer existed. “[G.Com] didnt actually fire management, but rather made [our] positions redundant and changed [our] responsibilities,” says Rohan. The “meeting” was not much help either, as the woman they were talking to, a Japanese G.Com representitive, apparently couldn’t quite bring herself to tell them they were essentially demoted, and just kept hinting at the fact.

He eventually contacted an ex AMG (Japanese Area Manager), and this guy finally broke the news to Rohan and the other, now-former, management. Says Rohan, “It was pretty clear that once schools and schedules had been organized and got up and running that G.com saw no need to keep its foreign management… From my understanding there were a large number of management that felt as I did in that the job and conditions had become intolerable and the attitude of Nova’s new owners was simply unacceptable.” So rather than submit to another ass-raping, Rohan decided to quit and start his own school instead.

Some of those “lucky” enough to be kept on by G.com were soon subjected to the company’s infamous and bizarrely hilarious training techniques, including “smile training”. As one current G.com-Nova employee recalls: “I had that bullshit retraining… the majority of the time was being taught how to smile and say “hello,” [the trainer's] idea being that we should act like manga characters from a four-year-old’s TV show!”

G.com-Nova offered former students who lost-out a 75% discount on new lesson packages, and the opportunity to continue studying English with the same textbooks and potentially the same instructors. Over a year later, they’re not doing too bad for themselves. They have reopened three schools in KitaKyushu where I live, and 123 more around the country. Incredibly, a huge number of students have come back: 80 percent of their 76,000 current students nationwide being ex-Nova.

Quite a few instructors too, continued or continue to work for the company, some out of financial necessity, and some to tide them over before they found ALT jobs. A few people in my area, like Rohan Smith or Joi Wong, even started up their own schools and aren’t doing too bad. We all got our back salary from the government too eventually, 80 percent of what we should have been paid, mine coming to a grand total of about ¥550,000.

Ultimately, as Kokura resident oracle from Scotland and long time Nova employee, Robert Bruce, pointed-out to me, it was a real education for us younger guys of what were up against when it comes to big business and corporations. When we have the people from the government who make the law, and the people from big-business who break the law, playing golf with each other on the weekends and holidaying on each other’s yachts in the summer, we’re always going to lose, and they’re always going to win.

Though, what Brucie often said of the company — “If you get as much out of them as they get out of you, you’re doing alright” — rings true, as it does of dealing with any major corporation, and I personally don’t feel like I lost out too much, and neither do most of my friends. A stronger Nova union — of which I’m not even sure if I was member or not — might have made the situation a lot better, as would have knowing more about labor laws in Japan, or actually paying the slightest bit of attention until it affected my bank balance. The internet was a treasure trove of information during and after the collapse, with LetsJapan.org being indispensible. Being bought and sold in the market place every day is, I guess, a game all of us don’t really have much of a choice but to play… That is, until the revolution, of course, and that definitely won’t be televised, or have a gay pink rabbit as its mascot.

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About the Author

Jordan Pearson

Jordan Pearson

Jordan Pearson was born and raised in Christchurch, New Zealand and is currently "teaching" English in Japan where he finds ample time at work for writing between taking naps. He has little professional writing experience, but was awarded many gold stickers at Primary School for English. He enjoys long walks on the beach and holding hands.

contact me directlyjordanpearson@thecommentfactory.com
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