Geos school chain files for bankruptcy
Rival to run some branches; fate of teachers uncertain

APR 22, 2010

Geos Corp., a major operator of foreign-language schools, has filed for bankruptcy with the Tokyo District Court with debts of ¥7.5 billion, and rival G.communication Co. will take over some of the defunct company’s schools, the two companies announced Wednesday.

Tokyo-based Geos, which has 2,100 employees, said it suffered poor earnings with dwindling number of students amid the recession and consumer distrust toward the industry stemming from the failure in 2007 of another major language-school operator, Nova Corp.

G.communication, which took over operations of some Nova schools, said it will do its best to secure employment for Geos employees.

“We will hold a briefing for those working at schools that we will take over and rehire them, and will try to provide the maximum employment opportunity for those working at schools we will not take over, in cooperation with shareholders and other involved companies,” Nagoya-based G.communication said in a statement.

Geos will close 99 English-language schools, while G.communication will take over 230 schools, according to the two companies.

An estimated 36,800 students are currently enrolled in Geos schools, with 29,000 of them registered at branches that G.communication has pledged to take over.

The bankruptcy is believed to be tied to Geos’ persistent attempts at market expansion, flying in the face of industry figures that showed the English-teaching market in Japan was shrinking amid the economic slump.

According to the Ministry of Economy, Trade and Industry, the monthly number of students enrolled at foreign-language conversation schools plunged from 826,858 in February 2006 to 335,604 this year. The corresponding monthly sales figures for the industry over the same period fell from ¥17.2 billion to ¥5.7 billion.

“Reduced sales (at Geos schools) can be partly attributed to the downturn of the (entire English-teaching) industry,” said Hitomi Suhara, a Geos executive who attended a news conference alongside G.communication President Hideo Sugimoto. “We were (also) getting fewer new students because we have restructured (the operations) and cut down on advertising.”

Sugimoto said his firm bought a large stake in Geos “to protect students.”

G.communication said it will keep the Geos school name and will resume lessons at those schools on Friday.
Students attending schools that will be closed will not get their tuition refunded, but they can go to classes at other Geos schools or take Geos online lessons with the money they have already paid.

They can also go to Nova schools or take Nova online lessons at a 75 percent discount until the accumulated discount reaches the amount they paid in advance, Geos said.

Students at Geos paid an average of about ¥37,000 for class fees in advance, the school operator said.
The fate of Geos teachers, meanwhile, is uncertain, even though G.communication says it will try to hire them.
Brian Gilliland, who works about five hours a day three to four days a week teaching corporate customers for Geos, said he hasn’t received his pay for the first half of April and hasn’t heard from Geos whether he will get his salary.
“Last night I got a call around 9:30 and I was told my class tomorrow will be canceled,” Gilliland, who has no other source of income, said. “This month, my classes finished, and I was ready for new classes. They said there are a bunch of classes starting in April, but I only had one class in April.

“Basically you can’t teach here anymore. Salary is going down and there is no work,” he said, adding that he is looking for a nonteaching job as he speaks Japanese.

Geos also runs English schools in the United States, Canada, France, Thailand and other countries. It also teaches other languages, including French, Italian, Spanish, Chinese and Korean, and arranges for Japanese students to study abroad.

Geos, which posted ¥16.4 billion in sales in 2006, was founded in 1973 by Tsuneo Kusunoki, who is now the president.

(Information from Kyodo added.)