Yes, it was over-expansion. NOVA's meteoric rise was fine in the 90s when they were the biggest player on the block, but once other players like ECC, AEON, GEOS and BERLITZ started creating real competition in the late-90s and early-00s, NOVA operated like they were still king of the block. NOVA didn't actually own any of the real estate they operated in and the focus ("ekimae eikaiwa") was always snatching up the best, most prominent rental location the closest to the main station exits no matter what the cost. So basically, they kept opening schools in the most expensive districts at lightning pace while profit margins slowly got narrower and they never bothered to adjust.
At the same time, then-president Saruhashi, desperate to cover up for these massive losses, started stealing from the employee pension fund and illegally re-allocating money. This is what he was eventually investigated and jailed for, and what ultimately triggered the bankruptcy.
It was around 2005 that the warning signs became clear as day. I was already on my way out but this definitely sped things up. Office supplies, stationary supplies, basic necessities were slowly being eliminated. I was also told that the Japanese staff were being forced to take pay cuts, but this was never confirmed as they were told not to talk about it. There was also visibly increased pressure on branch managers to increase sales, which resulted in nothing more than sobbing, neurotic 27yo Japanese girls having meltdowns in the breakroom a few times a week.
The writing was on the wall. I tried warning my coworkers but nobody wanted to believe that NOVA could possibly be in trouble. This is when I began re-exploring the option of going home and getting my commission in the Air Force, but then a drinking buddy of mine turned out to be a very connected bureaucrat and I got greased into a fantastic (for an unqualified 25yo alcoholic, anyway) teaching gig. And there went my dreams of going to war for GWB and coming home a Republican Party rising star.