NOVA English Teaching Corporation Faces Suspension!

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    Bad news for NOVA :

    The Ministry of Economy, Trade and Industry is set to order Nova Corp., Japan’s largest English-language school operator, to suspend part of its business for six months for having violated the law governing the industry, ministry sources said Wednesday.

    Nova was found to have lied to consumers about its services when it was soliciting them to become its students, the sources said.

    What does this mean for the future of NOVA? Ken Worsley of Trans-Pacific Radio suggests that they are horribly screwed:

    If METI shuts down their sales division, I can’t see NOVA surviving for over 30 days without suddenly selling off a huge amount of their assets (which might make for a dirty, nasty bankruptcy settlement when some of that cash starts walking). If NOVA’s owners had an ace up their sleeve, they would have pulled it out over the last week. They didn’t pull it because they don’t have one.

    If you think NOVA teachers live paycheck to paycheck, you should see the state of the company’s finances. It’s share price continues to clide into oblivion (click the chart on the right to view a full-size version), and sales and profit continue to dive while expenditures on paying off interest/servicing debt have nearly tripled in the past two years.

    If you’re currently working for NOVA, I suggest that you start looking for another teaching job immediately.

    Update 1    : Interested in seeing NOVA’s current stock price? Check this link or this link (via LeonJP).

    Update 2: Liberal Japan has pointed out that the Yomiuri Shinbun is reporting that NOVA is having its ability to make long term contracts suspended.

    Update 3: The Asahi Shinbun offers some more details on the penalty:

    Nova will be banned from soliciting, accepting or finalizing new contracts for long-term courses that last for over a year, the sources said.

    The suspension order will not affect those who have already signed up for lessons, meaning that Nova’s more than 400,000 students can continue taking classes.

    Still, the order could deal a serious blow to Nova’s operations because most of its contracts are for periods that exceed a year.

    And an example of how NOVA ripped off its customers:

    The company told potential students they would be able to book lessons for the times of their choice, but some of those time slots were, in fact, difficult to reserve, the sources said.

    In addition, the ministry apparently concluded that Nova’s refund rules violated the law, which bans companies from unfairly refusing or delaying refund payments, sources said.

    Under Nova’s system, students buy “points” in advance to pay for their lessons. The larger number of points they buy in bulk, the smaller the per-class fee.

    But when students stopped midway through the course on grounds they could not make reservations as smoothly as promised, Nova calculated the points already used at a higher value, thereby slashing the refund for the remaining points.

    Nova also acted in violation of a law that allows customers to cancel contracts within 8 days of signing them:

    At Nova, potential students first register their name, address and other data before finalizing their contracts. An official application to the school is made several days later, after the details of the contract are decided upon.

    However, Nova told students who wanted to quit that they could not use the cooling-off system, claiming that the day students registered their data was the first day of the contract, the sources said.

    Story Developing: Look for more in our daily news posts…

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