The Money Pit

What's the attraction for bailing out Nova? It doesn't produce anything tangible and it doesn't own its schools. Given recent reports, if Nova makes anything, it's a giant mess.

The Japan Times

It was meanwhile revealed that Nova would have liabilities in excess of assets totaling nearly ¥100 billion if the foreign-language school chain is liquidated, because the actual value of its assets is only about a 10th of book value, sources said.

According to the bankruptcy petition Nova filed Oct. 26 with the Osaka District Court to request protection from creditors and rehabilitation, liabilities exceeded assets by about ¥1.6 billion at the end of July, with assets totaling ¥42.3 billion and liabilities ¥43.9 billion.

But Nova's actual negative net worth will hit at least ¥94 billion if the company is liquidated because its assets — mainly textbooks, school equipment and other items — would be worth only ¥4.2 billion after depreciation, the sources said, meaning its liabilities total somewhere in excess of ¥98 billion.

The liabilities would comprise some ¥70 billion worth of tuition to be reimbursed to students and loans from banks, the sources said.

That number may swell even further because it delayed paying rent for its schools and neglected to pay wages to instructors and other employees since August.

Nova has roughly $850 million USD in liabilities and literally no assets to its name, yet 12 companies are now apparently interested in bailing it out. The companies have not been named.

It makes you wonder if these companies are really other English conversation schools who will each divvy up a piece of Nova for themselves.

If Nova somehow starts over again, it's going to be a much smaller school. A taste of what may be in store comes from The Asahi Shimbun. The article says that before Nova collapsed, it drew up plans to massively restructure the company by closing down roughly 490 of its schools and refocusing the business around approximately 200 schools in urban areas such as Tokyo, Osaka, Nagoya, and Fukuoka. If this is what's in store for Nova, it's going to have a lot fewer instructors and students.

Asahi article

ＮＯＶＡ、２００教室に縮小検討　倒産直前リストラ案

会社更生法適用を申請した英会話学校大手のＮＯＶＡ（大阪市）が倒産の直前、教室数を３分の１以下の約２００カ所に縮小する大規模なリストラ案をまとめていたことが２日、朝日新聞が入手した内部資料で分かった。各教室の採算や閉鎖した場合の収支への影響額を試算し、都市部を軸に存続教室を絞り込んでいる。保全管理人が来週中を期限として進めている支援企業探しでも、交渉の重要なたたき台になっているとみられる。

資料はＮＯＶＡ社内で１０月以降に作成された。存続予定の教室は東京では池袋、新宿東口など３０カ所、愛知は名古屋栄など１４カ所、大阪は梅田など１５カ所、福岡は天神など７カ所。採算性の高い首都圏や近畿などの都市部は十数校以上を維持するが、地方都市では１～２校に絞り込んでいる。

資料では、年間損益、保証金の返金額、閉鎖による経費の削減可能額などを教室ごとに試算。２００の存続教室をピックアップし、約４９０教室を閉鎖対象としている。ＮＯＶＡは更生法申請までの準備期間が短かったことから、交渉に必要な資産査定などが十分に済んでおらず、交渉の前提はこの２００教室への縮小案が軸になっているとみられる。