``We are now seeing the real beginning of liquidation resulting from the bursting of the bubble,'' said a director Toshihiko Yamazaki of leading credit research firm Tokyo Shoko Research Ltd. ``Now is the actual start of selection of those who can survive and those who are to be eliminated,'' he added.

The Tokyo-based builder filed for court protection from creditors, with debts totalling 406.72 billion yen ($3.31 billion), the second-biggest ever failure in Japan's construction industry after last year's collapse of Tokai Kogyo Co.

JDC's failure, the seventh of a listed firm this year, was seen as a prelude to more bankruptcies that could exacerbate the nation's bad debt problem and hurt credibility further.

Economic planning agency minister Taichi Sakaiya told reporters on Tuesday thatfailures of Japanese general contractors were likely to continue ``for some time.''