Collapse of study abroad agent Gateway21 Co.

There have been many of media coverage onto collapse of a study abroad agent Gateway21 Co. in Japan. It was the bigger news than Leman Brothers’ bankrupt or AIG bailout.

Tokyo-based Gateway21 Co. filed for a voluntary bankruptcy with the Tokyo District Court on October 1st., with estimated debts of about 1.3 billion yen as it failed to maintain cash to operate its sale team enlarged from stumbling revenues.

This is big new in that TV media have repeatedly covered a scene in which a president of Gateway21 Co. apologized to its hundreds’ creditors. The creditors were packed in a small meeting room and the president Tomomasa Fukui threw himself on the ground and bowed in apology while saying “I am really sorry that your dreams and lives fell apart,” according to an article of The Japan Times.

The Japan Times
Study abroad agent apologizes to clients, says it won’t pay them

Failure of overseas placement agency leaves many students in the lurch.

According to Gateway21’s lawyer, about ¥950 million in tuition and boarding fees paid by some 1,300 people who were planning to go overseas is unlikely to be recovered, even after bankruptcy procedures.

In addition, about 1,000 clients now abroad might have to interrupt their studies because Gateway21 has stopped paying its overseas business partners.

It is deja Vu what Japanese English learners have faced the last year. In 2007 Osaka-based Nova Corp., Japan’s largest language school chain, filed for bankruptcy with debts of about 43.9 billion yen and applied for protection from creditors under the Corporate Rehabilitation Law with the Osaka District Court as it failed to recover from a crippling penalty for false advertising.

Collapse of Nova Corp. spreads absolute nightmares across an estimated 420,000 students nationwide with no paybacks of tuition paid in advance. It also failed to pay about 2,000 Japanese employees since July 2007 and about 4,000 non-Japanese instructors since September 207.

I guess that some of Japanese English learners no longer trust business of private language schools nor rely on fly-by-night study abroad agents. Who could sell credibility and services together to Japanese people?