Auto bankruptcy protection won't work: report

(Reuters) - A Chapter 11 restructuring bid by one of the three top U.S. automakers is unlikely to succeed due to the damaged economy and frozen credit markets, and may even result in the company folding, billionaire investor Wilbur Ross told Bloomberg in an interview.

In addition, should the company go bankrupt, weakened auto-part suppliers could also be pushed to the wall, he added.

"If we were in a different overall economic environment, one of them going down wouldn't necessarily kill (the industry)," Ross told the agency.

General Motors Corp, Ford Motor Co and Chrysler LLC have been burning cash as the global credit crisis accelerated the decline in U.S. auto sales and placed severe limits on corporate and consumer borrowing.

The auto industry has stepped up lobbying efforts to get government support and the heads of the three U.S.-based automakers are expected to testify next week before a congressional committee considering aid for the industry.

"It doesn't add up that they (the Bush Administration) are letting GE and American Express to become banks to get aid, but they won't save the car industry," Ross told the agency.

Ross also said that a Chapter 11 filing by GM or another U.S. automaker wouldn't work and might devastate the economy.

(Reporting by Ajay Kamalakaran in Bangalore; editing by Simon Jessop)