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The Nova Bankruptcy Revisited
Not that you need more reminders about the fall of Nova and the chaos over the past year, but Jordan Pearson offers an excellent account of the collapse.
It would have sucked to be Jason Cornish:
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!”
But, as Jordan notes, deciding to cling to the corpse of the dead bunny or join G.communication was an unappealing choice.
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.
According to the Yano Research Institute, the effects of the collapse are still being felt. Their latest survey on the foreign language market shows it to be still on the skids, attributing the 8.4% year-on-year decline [PDF] to the "Nova shock." That shock has manifested itself in a marked shift from studying at schools to e-learning (studying via computer or mobile devices) and to corporate-oriented education services. E-learning increased 7.8% and corporate education services grew 3.4%. The survey notes that the decline in the language market may have bottomed out, provided that the businesses get their act together and regain the confidence of their customers.
With the financial crisis in the United States forcing Japanese manufacturers to cut employment and production, I'm not sure I share the tentaive optimism of the survey. There is still a lot of toxic debt that has to be dealt with and the full force of the crisis and the recession has yet to wash up on Japan's shores. There is still a lot of anger and mistrust over the way Nova decieved its customer and over the government's involvement and handling of the matter, and the receission may shrink the market yet further, killing off smaller and waker schools. It seems that and has been taking steps to control costs so as to weather the coming storm. Maybe I'm too pessimistic. Is eikaiwa and language learning more recession-proof than other businesses? Has the recession affected you or do you expect things to chug along as usual?
Comments
It does suck to be Jason Cornish!
Man..this is Japan..ladies wear make up in public swimming pools, girls dress like hookers to go shopping. What's so hard about wearing a suit to a business conference? You have to remember what country you are in....if you don't like it put on a pair of sweat pants and flip flops and catch the first flight home!
I think the point is that it wasn't a business conference, numbnuts.
Is eikaiwa and language learning more recession-proof than other businesses? Has the recession affected you or do you expect things to chug along as usual?
It is a diverse field.... Kids, Junior high, Senior high, University, Business, Eikawa, and most importantly, Private lessons. After Nova, the number of lesson suplliers went down dramatically. There are still demands for Native speakers of English, if you are flexible and know where to look.
Thanks for the lecture re "This is Japan". However, given the circumstances, people would have been justified, turning up buck naked.
Don't look in the anus of the industry* - all you will find is shit
*anus of the industry = eikawaiwa
Turning up sober.
I know the guy, and we all thought he was a goodie two shoes, when it came to alcohol.
His AAM, on the other hand, was a total piss wreck.
One day, he actually fell over on the sidewalk, seriously hung over and ill, while handing out pamphlets, and dry wretched.
No surprise though, in eikaiwa, the shit always floats to the surface.
I had a similar Nova employee say to me "You're going to fucking hate working here" on the night I arrived. Of course, this was more than a year before the shit hit the fan. Still, that spoke volumes about the kind of people I would be working with.
What would you class a conference about a corporate take over as? dip shit
Corporate Take Over? Bollocks!
Certainly was not that – if that were the case, Nova Corporation debts and liabilities would now be those of G Cumm, and they certainly are not.
All it was, was a sweet-heart deal – give me, G Cumm, the “brand name rights”, and we will give old Nova Corporation students who were stung, an easier ride – the receivers went along with this, of course, because it reduces the total Nova Corporation exposure, which is what the receivers have to manage, as they clean up the NC corpse on the sidewalk, and pay whatever percentages to Nova Corporation creditors that they can (which will be, fractions of yen to the yen, if anything at all, in the liquidation process).
While reading this article I used to recall that General Motor Companies posted losses so heavy for the last quarter that they actually lost more money per minute than the average household income. General Motors is an American institution. However, the calls for it to simply lapse into bankruptcy and restructure completely have increased as General Motors is seen as a money pit for taxpayer funded bailouts. The whole thing looks like a company on the brink, desperate for government funding to keep it afloat. Several divisions of the company have been jettisoned. One last bailout might not be enough to save General Motors.
General Motors doesn't deserve to be bailed out. It produces dinosaur, gas guzzling beasts that should all be taken off the roads. So glad Im not paying taxes in America to prop up these failed companies.
I agree, let GM go. If you check out the net, you will see they are the most universally complained about company in world history. Ok, alot of the complaints are annoymous, but hey, they are complained about, alot, but so are many companies, and hey, it could be all normal, but who knows, one has to be careful not to generalise, and hey, I am not GM apologist, no way, but hey, one has to be careful, you know. Well, let's just say they are complained about, and so are many companies, so may be it is all relevant, may be it is not, and so forth, and so on, but at least, well, if you are going to post about GM, well, don't do it anonymously, so to speak, and so forth, and so on. Where was I?
GENERAL WIDELY
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