Customers and employees of global adult language training company Wall Street English (WSE) are now seeking legal recourse against the firm in an attempt to reclaim tuition fees and unpaid salaries as it faces bankruptcy of its expansive China business.
Reports have surfaced regarding a coalition of more than 6500 students that now threaten to pursue a lawsuit to ensure their consumer rights amid the WSE’s collapse, with upwards to 520 million yuan ($80.3 million) in prepaid fees on the line, according to domestic media outlet Jimu News.
WSE, founded in Italy in 1972 before entering the Chinese market in 2000, informed staff last week that it would soon be undergoing bankruptcy proceedings, with an official declaration possible as soon as this week.
Competing tutoring companies have already sought to capitalize on the opportunity presented by WSE’s demise.
Over the weekend, Education First (EF) posted on its website and official WeChat account that they would accept the embroiled WSE’s former students, even offering discounts for its various online and offline classes. EF is a Switzerland-based international language training company that also offers extensive services in China.
Of the tens of millions of dollars in tuition fees customers are now attempting to reclaim, a significant proportion were paid through student loans. With payments coming due without having received services from WSE in return, many consumers now find themselves under considerable financial pressure.
WSE, one of the most prominent firms in the industry, had closed a significant proportion of its physical training centers across China following the outbreak of the COVID-19 pandemic, which had a detrimental impact on in-person attendance. Prior to last week’s announcement, the struggling firm had reportedly defaulted on up to three months of salaries for its employees in the country.
In an even greater blow to the company’s China operations than the pandemic, recent months have seen a drastic crackdown on the country’s once expansive private education industry.
A guiding principle of the move by authorities is the so-called “double reduction” policy, which aims to limit excessive after-school homework assignments and off-campus extra tutoring during non-school hours.
The new stance has delivered a shock to the China’s sizeable private education market, which until recently had been allowed to flourish largely unchecked in the country’s rapidly growing domestic economy. While much of the new regulation has been geared towards scaling back intensive extracurricular training for Chinese schoolchildren, adult learning centers such as WSE have also been impacted as investors grow wary of the broader industry.