The Japanese government scrambled to contain the fallout yesterday after extraordinary political pressure forced one of Japan's most venerable department store chains to go belly up.

Share prices on the Tokyo Stock Exchange slumped and the yen dipped against the dollar in the wake of Japan's second-biggest corporate failure, which commentators said went to the heart of the debate over Japan Inc's future. Osaka-based Sogo Co Ltd, whose roots go back to 1830, announced late on Wednesday it had filed for corporate rehabilitation under court protection after abandoning a controversial taxpayer-led bailout plan.