In a three part series, ZAKZAK takes a look at what lead to Nova's demise. Here's a translation of part 1.
Mornings started with "Have we been paid, yet?
English conversation school Nova grew rapidly by capturing the hearts of men and women, young and old, with its cute characters in TV commercials and the catch phase ekimae ryuugaku (study abroad in front of the station). The flip side was that the downward slide leading to its collapse was equally as quick. What happened in the company? The staff give their accounts of Nova's collapse in the first installment of this three-part series.
On the morning of July 27, a fax addressed to the staff was waiting for them when they arrived for work. The fax said that due problems with changes made to the accounting system, salaries were not deposited and that they should wait until the 31st.
It was a one-sided notice about the delay in paying salaries. The staff are paid on the 27th of each month, which also happens to be the same day that payments are made to many credit companies. It had been little more than a month since the Ministry of Trade, Economy and Industry announced its punishment of Nova on June 13. The Japanese staff could never have imagined in their wildest dreams that their pay would be late, and they scrambled to transfer money into their bank accounts to cover automatic withdrawals via their cell phones and call their parents to have them check their account balances.
The lack of explanation and the single fax regarding the delay in paying salaries, is legendary with Nova's president, Nozomu Sahashi. Much of the staff's sense of unease over the future was combined with anger and a feeling that this was the beginning of the end.
The chaos, however, was just beginning. July's salary was payed on August 1, but August's salaries were delayed until September 5. Salaries for September and October were never paid, and the company filed for bankruptcy protection under the Corporate Rehabilitation Law
In the meantime, Sahashi and his executives never gave a single, concrete explanation for the delay in paying salaries, and when staff asked the accounting section, they gave the same reply over and over again: "We don't know." Then the head of Accounting and a lot of other employees suddenly quit.
With salaries unpaid, going to the bank to check their accounts became part of the daily commute for staff, and instead of "Good morning," the days began with, "Have we been paid, yet?" After letting out a sigh that their account balances had not changed, lunch was a trip to the supermarket to buy bread that was near its expiry date. This was their existence.
Hey, Mr. Sahashi! If you have any idea what it means to be the president of a company listed on the stock exchange, don't you think you should appear before the media and tell us like a man about your private fortune in excess of ¥10 billion you're rumored to have? Shouldn't you explain things yourself instead of sneaking around or giving comments through a representative? The Nova bunny is crying!
A history of Nova
August 1981: Nova Kikaku established
September 1981: First school opened at Shinsaibashi, Osaka
January 1986: Expanded into Tokyo area
August 1990: Established Nova
1995: Changed corporate name to Nova Corporation
2000: Established ekimae ryuugaku schools in all 47 prefectures
2002: Started TV commercials featuring the Nova bunny
2004: Listed on the JASDAQ Stock Exchange
June 2005: Reached 900 schools
Nova grew through the use of the catch phases ekimae ryuugaku (study abroad in front of the station) and ibunka komyunikeeshon (intercultural communication) and was the industry leader in 1993. As of the end of March 2006, Nova had a 64% share of the English conversation market.